Market News
Pound rises after UK inflation blow - BLOOMBERG
The value of the pound rose in early European trading after an unexpected jump in UK inflation, which complicates the picture for the Bank of England at its next meeting on interest rates.
Sterling was up 0.2% against the dollar at $1.3408, although it remained flat against the euro, which was worth 86.7p.
David Morrison, analyst at Trade Nation, said: “Once again, the UK inflation numbers are going in the wrong direction.
“Sterling jumped on the news suggesting that the Bank is going to struggle to justify a rate cut next month.”
The annual inflation rate in the UK unexpectedly rose to 3.6% in June from 3.4% in May on higher transport prices, particularly fuel.
The Bank of England is still expected to cut interest rates in August but analysts said the case is weakening after the latest inflation figures.
Guy Foster, strategist at RBC Brewin Dolphin, said: “This was unhelpful news for the Bank of England, which wants to cut interest rates to support growth.
“If interest rates don’t come down, the government interest bill will be higher and the pressure for higher taxes will become more acute.”
The US dollar index (DX-Y.NYB), which tracks the greenback’s value against six major currencies, was down by around 0.2% to 98.45 at the time of writing.
