Pound rises after British inflation climbs for first time in 10 months

Interest rate cuts from most major central banks around the world are expected in 2024, and a major driver for the pound in the near to medium term is whether the Bank of England will begin its rate cuts later than the Federal Reserve and European Central Bank, and by how much.

The data, which follows bigger-than-expected falls in inflation in recent months, potentially adds to concerns at the Bank of England, which raised interest rates to a 15-year high of 5.25% in August in a bid to rein in price rises.

The pound rose today after data showed Britain's annual rate of consumer inflation increased in December for the first time in 10 months and came in higher than expected, challenging expectations that Bank of England rate cuts are near.

The pound strengthened versus the euro, which was down 0.16% at 85.93 pence.