Pound strengthens against dollar on mounting Bank of England rate hike bets as inflation heats up

Since the beginning of 2022, Sterling has fallen 11.8 per cent against the dollar, making it one of the worst performing currencies - in terms of spot return - in the G10.

The pound strengthened sharply against the dollar amid growing speculation the Bank of England will hike interest rates due to inflation soaring to more than double its target.

Fresh data published this morning by the Office for National Statistics (ONS) shows inflation scaled to 4.2 per cent in October, causing investors to pour into sterling.

Despite registering immediate gains, the pound edged back to rise 0.07 per cent against the dollar, settling at $1.3437.

Yields on 10-year UK government gilts rose 0.08 percentage points on the news.

More to follow.