The pound sinks, record in 40 years for British inflation

Around 11:20 a.m., the pound lost 0.86% to 1.2386 dollars, the greenback also rising once more following a few profit-taking sessions.

The British pound fell sharply on Wednesday as inflation hit 9% year-over-year in the UK, a record since 1989, in April.

Around 09:20 GMT (11:20 CET), the pound lost 0.86% to $1.2386, with the greenback also rising once more following a few profit-taking sessions.

Despite the rise in inflation, “with the risk of stagflation haunting the market, the Bank of England (BoE) might be forced to adopt a more gradual approach”, warns Susannah Streeter, analyst at Hargreaves Lansdown.

While the BoE has hiked rates four times since the end of 2021, sluggish growth in the UK might slow the pace of those hikes.

Conversely, the dollar is benefiting from the fact that there is “very little chance of a recession in the United States in the next 12 months”, even as the American Federal Reserve (Fed) is rapidly tightening its policy, comments Kit Juckes, analyst at Societe Generale.

Fed Chairman Jerome Powell once once more showed his determination on Wednesday evening by advocating positive growth but not too strong to curb inflation.

The institution will tighten its monetary conditions sharply until there is “clear” evidence that inflation is slowing, he said.

The greenback was up sharply once morest the euro (+0.35% to 1.0512 dollars), while inflation over 12 months reached 7.4% over one year in April in the euro zone , like the previous month, according to revised Eurostat data.