Sterling could buy more dollars than at any time in the past six months after U.S. inflation slowed to its lowest level in almost a year.
On Tuesday afternoon, 1 pound could buy $1.24, the highest level since early June.
A stronger pound means imported goods such as food and petrol become cheaper.Lower import costs in turn help bring about inflation Declines with lower costs for businesses and households.
The value rose from $1.22 this morning after the announcement of the lowest U.S. inflation figures in almost a year.
Official data showed that inflation rose 0.1 percent in November, missing economists’ expectations and marking the smallest increase in nearly a year.
For the full year, inflation rose 7.1% through last month, down from a 40-year high of 9.1% in June.
supply chain difficulty related Coronavirus disease Blockades, labor shortages and sky-high energy costs caused by war Ukraine All of this drives up prices across the economy.
The latest slowdown in the pace of price increases could signal that the worst of inflationary pressures is behind us.
However, inflation remains at multiples of the US central bank’s 2% target rate. The Federal Reserve, or Fed for short, has been steadily raising interest rates in an effort to slow the economy and inflation.
The regulator is expected to announce on Thursday increase againthis time at 0.5%.
higher Interest rates make paying off debt, such as a mortgage or credit card, more expensive.
A 0.5% hike would take US interest rates to their highest level since 2007.
Although GBP/USD continued to gain throughout the afternoon, closing at $1.23 tonight, it is still down against the dollar for the year.
Since peaking against the dollar in mid-January this year, the pound has fallen to as low as $1.37. All-time low After mini budget Markets were volatile in September.
its value has steadily climb up since.
Sterling has also gained against the euro, trading at about 1.16 euros since October.
UK inflation data will also be released on Wednesday and the Bank of England is expected to announce a rate hike on Thursday.