LONDON: Sterling jumped broadly while gilt futures extended losses on Tuesday after a higher-than-expected rise in UK consumer prices prompted speculation that UK interest rates would rise by year-end.
Consumer prices rose 1.0 percent last month -- a rise of a magnitude seen only once before -- taking the annual inflation rate to 4.5 percent, the highest since October 2008, the Office for National Statistics said.
Analysts had expected the annual rate to tick up to 4.2 percent after a surprise dip to 4.0 in March.
Sterling jumped more than half a cent to $1.6305, while the euro slipped 30 pips to 86.80 pence, approaching a seven-week low.
June gilt futures extended losses by more than 20 ticks to hit a session low of 120.15, having traded 11 ticks down at 120.42 before the data. Short sterling rate futures also extended losses to trade as much as 8 ticks lower on the day.
Britain's FTSE 100 extended losses to trade 0.3 percent lower at 5,905.07 after the data.
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