Analysts at BBH note that the headline UK consumer prices rose 0.7% in January for 2.3% year-over-year increase while the median estimate in the Bloomberg survey was for a 0.5% and 2.1% increase respectively thereby propelling GBP further northwards.
“The core rate jumped to 2.0% from 1.6% in January. The market expected a smaller increase. Of note too, the CPIH, which is the measure that includes a component for owner-occupied costs, rose to 2.3% from 1.9%.”
“Sterling has recovered over the past week or so. Assuming it holds on to some gains today, it will be the sixth advancing session in the past eight. The somewhat stronger than expected consumer inflation helped propel sterling through a down trendline drawn off the Feb 2 and 24 highs and catching yesterday's high. It is found near $1.2435 today. The break could point to another cent or two on the upside.”