Sterling rose in European trade on Wednesday against a basket of major rivals, extending gains for the second day against dollar following strong UK inflation data for March.
Bank of England is now widely expected to raise interest rates by 25 basis points in May with other successive rate hikes later on.
GBP/USD rose 0.4% to 1.2472, after rising 0.4% yesterday, the first profit in three days as the greenback against most major rivals.
UK Inflation
UK consumer prices rose 10.1% in March, beating estimates of 9.8%, and compared to 10.4% in February.
Core consumer prices rose 6.2% in March, beating estimates of 6%, and same as February.
Bank of England
Recent data showed inflation pressures remain strong on BoE's policymakers and there's a need for further UK rate hikes following the May 0.25% rate hike.
Bank of England Andrew Bailey outright called for further UK rate hikes if signs of inflation persisted.
UK Rates
Markets are now fully pricing in a 0.25% rate hike by Bank of England in May, with total of 50 basis points of rate hikes before reaching neutrality.
Estimates
UK inflation rates were much higher than expected and rather disappointing to Bank of England's policy makers, with now analysts expecting GBP/USD to remain solidly above $1.24, bolstered by UK consumer prices data.