© Reuters. Sterling surges as UK inflation jumps higher
Investing.com – The pound jumped higher on Tuesday after data showing that UK inflation jumped to its joint highest in five years in August, underlining concerns over a squeeze on living costs.
GBP/USD was up 0.89% at a one-year high of 1.3279 by 05:00 AM ET (09:00 GMT) from around 1.3205 earlier.
Consumer prices rose by 2.9% compared with a year earlier, the Office for National Statistics said, above economists’ forecasts for a rise of 2.8%. That equaled the four-year high set in May of this year.
The increase was mainly driven by rising costs for clothing and travel, the ONS said.
Average clothing prices jumped by 2.4% in August from a year earlier, the fastest increase since 1989.
The data underlined concerns over a squeeze on living standards with inflation outstripping wage growth. Wages are currently rising at an annual rate of around 2.1%.
The report comes ahead of the Bank of England’s next monetary policy meeting on Thursday, where officials are expected to keep interest rates on hold at their current record lows.
Last month the BoE said it expected UK inflation to reach 3.0% by October, due in large part to the steep drop in the pound since last June’s Brexit vote.
Sterling rose to a one-month high against the euro, with EUR/GBP down 0.77% to 0.9004 from 0.9056 earlier.