Sterling gains on euro and dollar

Sterling powered to its strongest in seven and a half years against a trade-weighted basket of currencies yesterday as higher-than expected UK inflation data bolstered bets that the Bank of England will raise interest rates in the coming months.

The numbers from the Office for National Statistics showed consumer prices rose 0.1% in July, beating expectations that inflation would remain stuck at zero.

Core inflation, which strips out food, energy, alcohol and tobacco prices, hit a five-month peak of 1.2%, up from 0.8% in June.