Sterling holds firm after UK data shows pickup in inflation

LONDON: The pound held steady on Wednesday, after data showed UK inflation picked up more than expected in December, which could lower the chances of more aggressive rate cuts from the Bank of England this year.

Geopolitical tensions have dominated activity in the currency market this week, overshadowing even economic data, as the prospect of another trade war between the United States and Europe has prompted investors to hedge against this risk by selling US assets, including the dollar against the pound.

Official UK data showed the headline rate of inflation accelerated to 3.4% in December, compared with a forecast of 3.3% in a Reuters poll of economists and against a 3.2% rate the month before, while services inflation also sped up to 4.5% from 4.4% in November.

Sterling traded at $1.3438, showing little change on the day or from levels traded right before the inflation report.

Against the euro , the pound also held steady at 87.22 pence.