Investing.com - The pound was broadly higher on Tuesday after data showing that UK inflation rose to the highest level in five-and-a-half years in September kept up pressure on the Bank of England to raise interest rates next month.
GBP/USD hit a high of 1.3287 immediately following the report and was at 1.3264 by 05:13 AM ET (09:13 AM GMT).
The annual rate of inflation rose by 3.0% in September, up from 2.9% in August, the Office for National Statistics reported. That was in line with forecasts and was the highest reading since early 2012.
Rising food and housing costs were the biggest factors driving the cost of living up, the ONS said, partly due to utility bills.
The retail prices index, another measure of inflation, rose by 3.9% in September.
The rise in the cost of living, largely driven by the fall in the pound since last year’s Brexit vote, has caused a squeeze on household spending as inflation continues to outstrip wage growth.
But the Bank of England has indicated that it expects to raise interest rates in the coming months so long as price pressures continue to increase and growth continues.
BoE Governor Mark Carney was due to give testimony before Parliament’s Treasury Committee later Tuesday and was likely to face questions on the exact timing of any rate hike.
Sterling was also higher against the euro, with EUR/GBP down 0.33% at 0.8872.