The Pound rose to hit the 1.276 mark against the dollar, representing the strongest appreciation in the last two months as the market has reacted positively to the unexpected outcome of the UK inflation figures for April.
The Sterling has also strengthened against the euro which fell to a two-month low. The annual inflation rate in the UK eased to 2.3%, nearing the Bank of England’s (BoE) target of 2%, although it remained above the anticipated 2.1%.
Furthermore, core inflation, which excludes volatile items such as food and energy, declined for the third consecutive month to 3.9%, the lowest since October 2021, yet still above the forecast of 3.6%.
Consequently, the pound could continue to appreciate as this data dampened speculation about an imminent interest rate cut by the BoE with the probability of seeing a cut in June declining significantly. UK yields jumped as well as a result and could continue moving toward early May’s highs if interest rate cut expectations continue to slide.
