Pound jumps 1.3pc as US inflation slows - live updates - THE TELEGRAPH
Sterling has surged against a weaker dollar after lower-than-expected US inflation data dented expectations of more Federal Reserve interest rate rises.
The pound jumped 1.4pc against the US currency to $1.2250 – its highest level since the beginning of the month.
The consumer price index stood at 8.5pc in July, down from 9.1pc in June. The weaker reading was driven by a fall in fuel prices, which offset a rise in food and accommodation costs.
Core inflation – which strips out volatile food and energy components – rose 5.9pc, behind forecasts of 6.1pc.
The figures are likely to fuel speculation that the Federal Reserve will shift its focus away from taming inflation with interest rate rises and instead worry about a looming recession.
Traders have cut their bets that the Fed will deliver a third straight 75 basis-point increase at the next meeting in September, with a more moderate 50 basis-point rise now considered more likely.
While the fall in fuel prices is good news for Americans, they're still grappling with a cost-of-living crisis, forcing many to load up on credit cards and dip into savings.