LONDON: The pound fell on Wednesday after data showed surging food prices pushed British inflation into double digits last month, leaving investors to weigh up the outlook for interest rates after the scrapping of most of the government’s “mini-budget”.
At 0845 GMT, the pound was down 0.4% against the dollar at $1.12750 pence, and down 0.18% versus the euro at 87.220 pence.
Wednesday’s CPI data showed the consumer price index (CPI) increased by 10.1% in annual terms in September, in a new blow for households grappling with a cost-of-living crisis.
“The UK CPI was a little firmer than expected, but the impact on GBP was limited and if anything on the downside. Rising UST (US Treasury) yields are dragging the greenback higher across the board, including against GBP,” said Mizuho senior economist Colin Asher.
The inflation numbers continue a turbulent week for the currency, after Jeremy Hunt on Monday scrapped most of Prime Minister Liz Truss’s planned tax cuts and shortened her huge energy price cap plan to six months from two years.
The U-turn on the fiscal plans prompted traders to curb their bets on the Bank of England raising interest rates.
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