The sterling jumped above 2.04 versus the dollar after a report showed inflation deceleration was not as fast as expected.
UK CPI headline for June fell from 2.5% to 2.4% as expected. Excluding volatile components, food and energy, the core index rose at a rate of 2% in the year to June, the fastest pace since March 1997. Another inflation gauge, RPI came out at 4.4%, up from a reading of 4.3% in the previous month. The Bank of England may need to lift rates once more in September to curb inflation.
The sterling rallied across the board following the inflation reports. It broke through the 2.04 handle against the dollar and rose to a fresh 26-year high at 2.0474.
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