LONDON, Feb 16 (Reuters) – Sterling edged up versus the dollar on Wednesday after data showed inflation in Britain at a nearly 30-year high, reinforcing expectations the Bank of England will further hike interest rates.
The annual rate of consumer price inflation rose to 5.5% in January, the highest since March 1992, and above expectations from economists for it to hold at December’s 5.4%.
Wider markets remained jittery about the threat of Russia invading Ukraine. Russia has said it has pulled back some troops from Ukraine’s border – alleviating some stress in markets – though the move has been met with scepticism.
Soaring inflation across many global economies has sparked a debate about how fast central banks should rein in stimulus deployed earlier in the COVID-19 pandemic to prop up businesses and consumers.
The BoE has already raised interest rates twice since December – lifting rates to 0.5% from 0.1% – and financial markets expect a further rate rise to 0.75% or 1% on March 17 after the BoE’s next meeting.
“As we have come to expect the (inflation) data was stronger than the consensus. However, the beat was marginal,” said currency analysts at MUFG in a note.
“It won’t change BoE expectations over coming meetings and hence GBP impact should also be minimal.”
Sterling was last up 0.2% versus the dollar at $1.35700. .
Against the euro, the pound was broadly flat at 83.87 pence per euro.
(Reporting by Iain Withers; Editing by Michael Urquhart)
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