LONDON: Sterling jumped against the dollar after lower-than-expected US inflation print for July dampened expectations for a 75 basis-point Federal Reserve rate hike in September.
Traders slashed bets the Fed will deliver a third straight 75 bps interest rate increase in September after US consumer prices did not rise at all in July compared with June.
“The softer inflation print has given risk assets the new lease on life they were looking for, and seems to confirm the idea that some sort of Fed pause might take place in the final months of 2022,” said Chris Beauchamp, chief market analyst at IG Group.
Against a weakening dollar, sterling jumped 1.4% higher to an eight-day high of $1.2250. It was up 1.2% at $1.2213 at 1317 GMT.
Against the euro, sterling edged up 0.16% to 84.44 pence , after hitting its lowest level since July 26 in earlier London trading as investors had turned their focus to the energy crisis hitting economic growth prospects in Britain.
According to press reports, Britain is making plans for organised blackouts for industry and households over winter when cold weather may coincide with gas shortages.
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