Pound rises as UK inflation data supports case for more rate hikes

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The British pound was set for its biggest one-day rise against the dollar in a week-and-a-half on Wednesday.

Article originally published by Reuters. Hargreaves Lansdown is not responsible for its content or accuracy and may not share the author's views. News and research are not personal recommendations to deal. All investments can fall in value so you could get back less than you invest.

Published by

16 Aug 2023

The British pound was set for its biggest one-day rise against the dollar in a week-and-a-half on Wednesday, as latest UK inflation numbers reinforced bets that the Bank of England will likely hike interest rates again.

Consumer price inflation slowed to 6.8% in July. But core inflation, which strips out volatile food and energy prices, remained at 6.9% in July, flat versus the June reading, and higher than economist expectations for a reading of 6.8%.

Services inflation picked up to 7.4% from 7.2% in June.

Sterling was last up 0.3% against the dollar at $1.2736 and set for its biggest one-day jump since Aug 7.

It rose 0.1% against the euro, with the single currency last buying 85.75 pence.

«Core inflation remains stubbornly high at 6.9% and is now slightly above the headline level,» said Oliver Blackbourn, Multi Asset Portfolio Manager at Janus Henderson Investors.

«This presents a headache for the Bank of England as it will want to see