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Pound gains as dollar holds close to weekly highs after inflation stats

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News Tech: The dollar held near weekly highs on Wednesday after rising US yields led to a sharp rally against the euro this week amid growing hopes of a rate hike by the Federal Reserve. The pound is flat against the dollar after data showed UK inflation rose 5.4% to its highest level in 30 years in December, raising hopes of a rate hike. I was. Ambrose Crofton, the global market strategist at J.P. Morgan Asset Management, said the Bank of England expected him to raise interest rates by 25 basis points in February.

“The question is not whether rates will be raised, but how quickly and by how much,” he said. “At the same time, there is a growing impression that the ECB (European Central Bank) is still taking its time to get a grip on eurozone inflation. That’s the strength,” he said. The euro was flat, returning to its 50-day moving average of $1.1333 after recording its sharpest drop in a month the day before.

“The strength of the labor market will give the Bank of England confidence to further cut support to the economy as it seeks to better handle inflation,” he said. It was boosted by a further rise in US Treasury yields ahead of the Fed’s monetary policy meeting. Yields on 10-year government bonds edged higher to a two-year high of 1.9% on Wednesday. Berenberg forex trader Moritz Paysen said analysts expect the Fed to raise rates amid a “stable” job market and rising inflation.

The pound he traded at $1.3593, a far cry from last week’s nearly 11-week high. Talk of a leadership challenge to Prime Minister Boris Johnson has held back the pound. The overall result was that the US Dollar Index, which measures the US dollar against six major peers, was 0.04% lower at 95.670.

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