Pound's Rollercoaster Ride Amid Surprising Inflation Data

The pound saw fluctuations after unexpected UK consumer inflation data in January undermined chances of two rate cuts by the Bank of England this year. While inflation and services data were above estimates, pound's value stabilized shortly after an initial spike.

The British pound experienced a brief surge on Wednesday following surprisingly high UK consumer inflation data for January, which challenged expectations for the Bank of England to make two interest rate cuts this year.

The Office for National Statistics reported a 3% annual rise in the consumer price index, surpassing the 2.8% forecast. Services inflation, noted by the BoE as a potential hurdle, rose from 4.4% in December to 5% in January, albeit below the expected 5.2% rate.

Despite an initial jump, sterling quickly normalized. As of 0718 GMT, it saw a minor gain of 0.05% against the dollar, while maintaining stability against the euro at 82.86 pence, reflective of its pre-report valuations.

(With inputs from agencies.)