Categories: Business

Pound gains momentum as UK inflation breaks 10-month decline

The pound experienced an increase on Wednesday following the release of data indicating a rise in Britain’s annual consumer inflation rate in December, marking the first uptick in 10 months and surpassing expectations. This development challenges the prevailing anticipation of imminent rate cuts by the Bank of England.

Sterling saw a 0.1% uptick to $1.2650, rebounding from a 0.19% decline before the data was unveiled. Against the euro, the pound strengthened, with the euro down 0.16% at 85.93 pence.

Official figures revealed that the annual consumer price inflation in Britain accelerated to 4% in December, up from 3.9% in November, which had been its lowest in over two years. This surpassed the 3.8% reading projected by a Reuters poll of economists.

The data, following unexpected declines in inflation in previous months, may raise concerns at the Bank of England, which had raised interest rates to 5.25% in August to curb rising prices.

In December, core inflation, excluding volatile items, remained at 5.1%, mirroring the rate in November. Services inflation increased to 6.4% in December from 6.3% in November.

Analysts at MUFG noted that the stronger-than-expected readings for both core and services inflation in December are disappointing and may deter the BoE from initiating rate cuts sooner. The UK rate market currently does not fully factor in the first 25 basis points rate cut from the BoE until June.

Market expectations for interest rate cuts in 2024 from major central banks globally, including the Bank of England, will play a crucial role in shaping the pound’s trajectory in the near to medium term. Presently, there is an approximately 80% chance of a Bank of England rate cut in May, while the Fed and ECB are anticipated to make cuts in March and April, respectively. However, Federal Reserve Governor Christopher Waller’s comments and softer economic data from China slightly reduced bets on Fed rate cuts on Tuesday, contributing to a stronger dollar.

Treasure Orokpo

A multi-talented individual with a passion for diverse fields, Treasure Orokpo is a trained journalist, skilled cook, and AI enthusiast. When she's not uncovering the latest stories, you can find her whipping up culinary creations in the kitchen and entertainment.

Recent Posts

Soaring rice prices threaten Christmas celebrations for Nigerian families

Rice, a staple for Christmas celebrations in Nigeria, has become a luxury this year. Soaring…

21 hours ago

Panic as Stage collapses during Odumodublvck’s performance at Lagos concert

Panic erupted on Saturday at a concert in Lagos when the stage collapsed during Odumodublvck’s…

21 hours ago

2025 Budget: FG allocates ₦6.36bn for renovation of Tinubu, Shettima’s official quarters

The Federal Government of Nigeria has allocated ₦6,364,181,224 billion for the refurbishment and rehabilitation of…

21 hours ago

Black Market Dollar to Naira Exchange Rate Today 22nd December 2024

The black market dollar to naira exchange rate for today, 22nd December 2024, can be…

21 hours ago

NNPC debunks shutdown rumors, confirms fuel loading at Port Harcourt Refinery

The Nigerian National Petroleum Company Limited (NNPCL) has refuted claims that the 60,000 barrels per…

21 hours ago

‘We have to find a way’ – Guardiola laments after defeat to Aston Villa

Manchester City finds itself in unprecedented turmoil, with relegation-level form showing little sign of improvement.…

22 hours ago