Investing.com - The pound was trading close to the day’s highs against the dollar on Tuesday after data showing that the annual rate of inflation in the U.K. rose to a one-year high in January.
GBP/USD was up 0.35% at 1.4488, close to the day’s highs of 1.4516.
The Office for National Statistics reported that the consumer price index rose 0.3% on a year-over-year basis last month, matching forecasts and up from 0.2% in December.
The main contributors to the increase in consumer prices were motor fuels and also to a lesser degree alcoholic beverages and clothing. Air fare prices partially offset the rise in inflation, falling by more than they did a year ago.
Consumer prices fell 0.8% in January from a month earlier, worse than forecasts for a decline of 0.7% and following a gain of 0.1% in the prior month.
Core inflation, which strips out food, energy, alcohol, and tobacco prices rose 1.2% last month, below forecasts for an increase of 1.3%.
Sterling hit session highs earlier in the day after an opinion poll for the U.K.’s ITV (L:ITV) television network showed that there was a clear majority in favor of Britain remaining in the European Union.
Sterling was slightly higher against the euro, with EUR/GBP slipping 0.14% to 0.7718.
Investors were awaiting the ZEW report on German economic sentiment later in the day.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.3% to 96.46.
The dollar slid against the other major currencies as market sentiment deteriorated, with European stocks and oil prices falling after earlier gains.