Sterling rose in European trade away from four-week lows against dollar, on track for the first profit in three days following strong UK inflation data.
Such data bolstered the the case for another rate hike by Bank of England next month to combat stubborn inflation, with increased speculation about yet an additional rate hike in July as well.
GBP/USD rose 0.5% to 1.2470, with a session-low at 1.2411, after closing down 0.2% yesterday, the second loss in a row, plumbing four-week lows at 1.2373 as dollar strengthened against major rivals, and following weak UK data.
UK Inflation Data
UK consumer prices rose 8.7% in April, passing estimates of a 8.2% increase, while down from 10.1% in March.
Core consumer prices rose 6.8% in April, passing estimates of 6.2%, and up from 6.2% in March.
Bank of England
Such data showed that inflationary pressures remain strong on Bank of England's policymakers, and shows the need for further increases in interest rates.
Bank of England Governor Andrew Bailey said there might be a need for further increases in UK interest rates if inflation remained high.
UK Interest Rates
Markets are fully pricing in a 0.25% rate hike by BoE in June, with another likely 0.25% rate hike in July.