Sterling strengthens on CPI data

Story link: Sterling strengthens on CPI data

New inflation data in the UK showed that consumer price inflation was up at an annual rate of 2.4 percent in June.

The greater than expected rise in inflation sent sterling higher as analysts suggested that the figures could mean more interest rate increases from the Bank of England soon.

Sterling had added 0.4 percent to $2.0450 versus the greenback by midday in New York after having reached a new 26-year high of $2.0476 earlier in the session.

The pound was also 0.4 percent higher in relation to the euro, to £0.6735, while it added 0.4 percent to SFr2.4587 against the Swiss franc.

The euro held its own against the US dollar at $1.3772 as investor confidence dipped in Germany, but the shared currency was still 0.4 percent higher versus the yen at ¥168.50 as investors continued to sell the Japanese currency to fund carry trades.

Most analysts still expect the European Central Bank to raise interest rates in September or October, but some have begun to suspect that a rate hike then might mark the end of the current cycle of tightening in the Eurozone.