GBP falls under the weight of inflation, USD clings to its 32-year peak against JPY

Sterling fell on Wednesday after a bigger-than-expected rise in consumer price inflation in Britain and fears of a deeper recession in the country fueled expectations that the Bank of England’s November interest rate hike would be less severe.

The dollar consolidated at a 32-year high against the yen and rose from the lowest point in two weeks against a basket of major competing currencies, supported by expectations that the Federal Reserve will raise interest rates by a large percentage.

Sterling fell 0.57 percent at 1100 GMT, recording 1.12570 per dollar after data showed that consumer price inflation in Britain rose to 10.1 percent on an annual basis in September, meaning it rose more than expected and returned to a 40-year high reached in July.

The dollar rose 0.2 percent to 149.61 yen for the first time since August 1990.

As for the dollar index, which measures the performance of the US currency against a basket of six major currencies, it rose 0.7 percent to 112.74, after falling to its lowest level since the sixth of October (EGX: OCDI), recording 111.76 on Tuesday.

The euro fell 0.8 percent to $0.97800, retreating from yesterday’s high of $0.98755, a level not seen since October 6.

The New Zealand dollar remained at a high level, gaining 2 percent this week, after bleak consumer price data released on Tuesday raised expectations that the central bank would continue to tighten monetary policy.

The New Zealand dollar was trading in the latest trading, down 0.16 percent at $0.56770, which is close to a two-week high recorded on Tuesday at $0.5719.