LONDON — The pound briefly climbed above 1.25 against the dollar overnight, hitting a level not seen since late February, as Britain’s currency continued to benefit from a weaker dollar, and a higher than expected inflation reading on Tuesday.
The ONS said on Tuesday that the UK’s consumer price index — the key measure of inflation — was 2.3%, up from 1.8% in January. That was actually a bigger rise than economists polled before the release expected. The forecast had been for a 2.1% headline reading.
This pushed the pound almost 1% higher on the day, as investors began to price in a greater prospect of an interest rate hike from the Bank of England.
Inflation data then continued to support sterling overnight, allowing it to pass the psychologically significant $US1.25 mark, hitting a peak of $US1.2506.
With no obvious driver on Wednesday, sterling is now pretty much flat on the day, gaining 0.06% on the greenback, and has dropped back under the $US1.25 mark. As of just after 8.15 a.m. GMT (4.15 a.m. ET), sterling is trading at $US1.2487, as the chart below illustrates.
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