The pound strengthened against the US dollar on Wednesday, driven by a surprise increase in UK consumer inflation. Data from the Office for National Statistics showed that prices rose at an annual rate of 3% in January, exceeding expectations of a 2.8% rise.
While services inflation remained below forecasts, its rate of 5% was still higher than December’s 4.4%. This development could reduce pressure on the Bank of England to deliver another two interest rate cuts this year.
The pound initially surged after the data release but subsequently returned to pre-report levels. At 7:18 GMT, it stood at $1.262, up 0.05% from previous close. The euro exchange rate remained stable at 82.86 pence against the pound.
Source: https://www.reuters.com/markets/currencies/sterling-edges-up-after-jump-uk-inflation-2025-02-19