The pound fell for the first time in five days against the
dollar after U.K. inflation dropped to its lowest rate in 4 1/2 years
in May, damping speculation the Bank of England will
raise interest rates sooner than forecast. Sterling weakened against
most of its 16 major peers. The yield on two-year U.K. government bonds earlier
reached the highest since 2011 after policy maker David
Miles hinted that minutes of its June 5 meeting will show the central bank
is moving closer to raising interest rates, according to the London-based Times
newspaper. Governor Mark Carney said on June 12 that borrowing costs
may rise sooner than economists expect.
Sterling slid less than 0.1% to $1.6975 at after rising to
$1.7011 yesterday, the highest since August 6, 2009. The pound was little
changed at 79.91 pence per euro after yesterday appreciating to 79.59 pence,
the strongest level since Oct. 1, 2012. The pound strengthened 8.9 percent in
the past year, the best performer after the New Zealand dollar among
10 developed-nation currencies tracked by Bloomberg Correlation-Weighted
Indexes. The euro gained 1.7 percent and the dollar was little changed.
Regarding the inflations measures, Consumer prices rose 1.5% in May, the least
since October 2009, the Office for National Statistics said. That
compared with a n forecast of 1.7%. Inflation has been at or below the central
bank’s 2 percent target for six months, the longest stretch since 2009.
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