Pound Climbs on Unexpected Inflation

The pound had a positive performance today after U.K.’s inflation did not decline as specialists suggested, bringing optimism that the British recession might be easing since difficult periods tend prices to decrease inflation and eventually reach deflation.

The pound had the sharpest rise versus the U.S. dollar in more than a week today after the Office for National Statistics indicated that the inflation held at 1.8 percent in July, a sign that can be interpreted as positive since the economists forecast a decline in the current rate due to complications in the British economy. The current inflation target in the U.K. is 2 percent, and quantitative easing measures have been taken by the Bank of England to help the economic recovery in the United Kingdom, but even if alcohol and DVD prices rose during the past month in England, several other economic sectors, mainly the real estate, still maintain the current inflation level below the target.

Today’s rise in the British pound may also be interpreted as a corrective movement from previous days losses, since optimism in Europe has risen with the German ZEW economic sentiment breaking records. The economic situation in Great Britain still remains of the most delicate in Europe, and a sharp consistent rally for the pound is unexpected.

GBP/USD traded at 1.6452 as of 11:49 GMT from a previous rate of 1.6291 in the intraday comparison. GBP/JPY climbed to 156.32 from 153.87.