British inflation remained steady in December, defying expectations of a fall and making it easier for the Bank of England to raise interest rates next month.
The Office for National Statistics said on Tuesday that consumer prices rose 0.4 percent on the month, leaving the index 1.3 percent higher than a year earlier, still well below the BoE's government-set target of two percent.
But with market expectations having centred around a fall to 1.2 percent, analysts said the figures were not the obstacle to a rate rise that many had predicted.
The pound extended its gains to around $1.81 and government bonds and interest rate futures fell sharply as dealers became more confident that interest rates would rise to 4.0 percent next month.
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