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Sterling surges, gilts fall after surprise UK inflation jump
Imaduddin
15 Jul, 2014
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![](https://i.brecorder.com/images/2014/07/sterling-sterlingg.jpg">LONDON: Sterling rose and British government bonds fell on Tuesday after data showed British inflation jumped unexpectedly in June to its fastest rate since January, increasing market bets that interest rates will rise this year.</P><P>Consumer prices rose 1.9 percent on the year in June, the Office for National Statistics said. Economists taking part in a Reuters poll had expected inflation to accelerate to 1.6 percent from 1.5 percent in May, a 4-1/2 year low.</P><P>Sterling surged to the day's high of $1.7147 after the data from $1.7078 beforehand, up a third of a percent and close to a near six-year high of $1.7180 hit earlier this month.</P><P>The euro fell to a one-week low of 79.27 pence from 79.755 beforehand, down half a percent on the day.</P><P>Short sterling rate futures fell and the sterling overnight index swap curve implied a slightly increased risk of a rate hike in December.</P><P>Inflation had largely been declining over the past year, and remains below the Bank of England's 2 percent target, allowing the central bank to hold off on raising interest rates despite Britain's surprisingly strong economic recovery.</P><P>)