LONDON, Nov 17 (Businesshala) – The pound climbed to a one-week high against the US dollar and hit a 21-month high against the euro on Wednesday, after data showed British inflation hit a 10-year high last month. level, which boosted expectations. Increase in rates early next month.
Consumer prices rose 4.2 per cent year-on-year in October, faster than the 3.1 per cent growth in September. Both the BoE and Businesshala surveys of economists had pointed to a 3.9% reading.
“This morning’s UK inflation data was stronger than expected and, along with Tuesday’s labor market data, further strengthen the case for a hike in December,” said Mizuho strategists.
“The risk with the price up 15 bps for the next meeting is that the market starts thinking about a 25 bps hike.”
Against the US dollar, the British currency gained 0.3% to $1.3480, its highest level since November 10. This marked a major milestone against the struggling euro, which hit a February 2020 high of 83.90 pence.
Money markets are now expecting a rate hike of more than 15 bps next month, compared to around 10 bps on 5 November, a day after the Bank of England kept rates on hold.