The British pound continued its slide against the US dollar after finishing lower on Tuesday trading but staged a huge rally versus the euro amid a strong economic data released by the UK government.
Sterling gave up 0.58% of its strength against the US dollar and last traded at 1.3174 per greenback, to stretch its losing streak to two days after closing down at 1.3260 on Monday.
Meanwhile against the euro, sterling chipped in 0.3% gain to settle at 1.127.
The mixed result was prompted by the recent inflation figure reported by the Office for National Statistics.
Based on the figures, the country’s inflation rose to 3% in September from 2.9% in August, the highest CPI level in almost five years, which sparked fresh hopes on the possible interest rate hike by the Bank of England. The inflation rate in September matched the expectations of analysts.
The core consumer price index hit its record high as food and recreational goods prices kept ticking in the past month, which pushed the inflation even higher.
The BOE’s interest rate hike became the market’s focus anew after the data as investors have high hopes that the central bank will pull off such move when key officials meet next month for their policy meeting.
However, the gap between inflation and average earnings may weigh in on the decision of the central bank about the movement of its interest rates as real wages extended its weakness.