ExchangeRates.org.uk - The Pound (GBP) firmed on Wednesday morning, as GBP investors responded to the UK’s latest consumer price index.
The CPI figures published by the Office for National Statistics (ONS) reported headline inflation accelerated from 1.7% to 2.3% in October.
Outpacing forecasts it would only rise to 2.2% and striking its highest levels since April.
While the uptick in headline inflation was largely attributed to the rise in the UK energy price cap last month, the surprise uptick in core inflation (which strips out energy and food prices) suggests that prices pressures remain sticky across the economy.
This strengthened Sterling sentiment on Wednesday as led to a further trimming of Bank of England (BoE) interest rate cut bets.
Markets now the odds of the BoE delivering another rate cut in December at just 16%.
The US Dollar (USD) also strengthened on Wednesday as skittish investors continued to favour the safe-haven currency.
This came amid renewed tensions between Russia and the West, with the US closing its embassy in Kyiv due to the threat of a ‘significant attack’.
Tensions have flared this week after the US authorised Ukraine to use long-range US supplied missile to strike targets within Russian territory, with the Kremlin threatening a nuclear response, following a change to its nuclear doctrine.
Looking ahead, the Pound to US Dollar (GBP/USD) exchange rate may maintain a positive trajectory on Thursday if geopolitical tensions continue to run hot.
If Russia continues to sabre-rattle and threaten to escalate the conflict with Ukraine we may see investors continue to flock to the perceived safety of the US Dollar.
Meanwhile, the latest industrial trends orders index from the Confederation of British Industry (CBI) may drag on the Pound if November’s data reports factory orders remained negative.
This content was originally published on ExchangeRates.org.uk