The pound is charging

The pound is jumping on Tuesday morning after the UK’s inflation reading for July came in higher than expected.

The Office for National Statistics says the consumer price index — the key measure of inflation in Britain — was up 0.6% on a year-on-year basis in July, marginally higher than the consensus forecast of economists and up from 0.5% in June.

As a result, sterling is bouncing, climbing around 0.7% just after 9:50 a.m. BST (4:50 a.m. ET), 20 minutes after the data was released. Here’s how that jump looks on the day:

While it has jumped substantially on the day, sterling is still majorly depressed, sitting at 31-year lows against the dollar. On Monday the currency hit a three-year low against the euro. Sterling has fallen by 14% since the UK voted to leave the European Union in late June, and has not been this weak against the dollar since 1985 when Chancellor of the Exchequer Geoffrey Howe let the pound float and the US Fed pushed up the dollar by raising US interest rates above 10% in a drive to stamp out inflation.

Despite Tuesday’s rise, more weakness from sterling is expected, with HSBC arguing last week that sterling will fall to $1.10, and reach parity with the euro by the end of 2017. Other predictions about the pound’s medium term outlook range from $1.20 at Goldman Sachs and $1.15 from Deutsche Bank, all the way to $1, a prediction made by former PIMCO executive Mohammed El-Erian.

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