Sterling climbs for first session in three after UK inflation data

Sterling rose in European trade against dollar on track for first profit in three days following strong UK inflation data, which bolstered the case for UK policy tightening sooner than expected. 

GBP/USD rose 0.4% to 1.3862, after closing down 0.5% yesterday, the second loss in a row, while strong UK inflation data paved the way for possible policy tightening in the UK soon. 

UK consumer prices rose 2.5% in June, the highest rate since August 2018, passing estimates of 2.2%. 

The data raised pressures on Bank of England policymakers to tighten the policy and raise interest rates sooner than initially planned. 

Sterling was the strongest performer against dollar among major currencies during May, marking a 2.9% profit, the largest monthly profit since July 2020.

The gains follow a campaign of rapid vaccination against Covid 19 in the UK, while the government officially relaxed economic restrictions to return life to usual pace.