GBP Rallies as CPI Surpasses BoE Target

The pound rose to the highest in three weeks and gilts fell as U.K. inflation accelerated more than forecast to break through the Bank of England’s target for the first time since 2013.

The data showing annual inflation picked up to 2.3 percent in February, versus a median estimate of 2.1 percent in a Bloomberg survey of economists, underlined bets by investors that the BOE will tighten policy as early as next year. Market rates are now fully pricing a 25-basis-point rate rise by August 2018, compared with a 67 percent chance priced on Monday.

Sterling rallied as much as 0.9 percent to $1.2471, the highest since Feb. 27. Ten-year gilts dropped with yields rising six basis points to 1.29 percent, the highest in more than a month.


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Craig Erlam

Craig Erlam

Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam
Craig Erlam

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