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Sterling Rallies as U.K. Inflation Breaks Central Bank Target

  • Investors add bets on Bank of England lifting rates next year
  • Pound gains seen as temporary as Brexit negotiations loom
Bloomberg business news

U.K. Inflation Breaks Through BOE Target at 2.3%

The pound rose to the highest in three weeks and gilts fell as U.K. inflation accelerated more than forecast to break through the Bank of England’s target for the first time since 2013.

The data showing annual inflation picked up to 2.3 percent in February, versus a median estimate of 2.1 percent in a Bloomberg survey of economists, underlined bets by investors that the BOE will tighten policy as early as next year. Market rates are now fully pricing a 25-basis-point rate rise by August 2018, compared with a 67 percent chance priced on Monday.