UK inflation up to 3.7 in December

This morning’s inflation figures showed an increase to 3.7% in December – the highest in 8 months.

Sterling surged higher this morning, as analysts factored in an increased likelihood of interest rate rises, which are the Bank of England’s main weapon against rising inflation.

The Pound was up nearly a cent against both the US Dollar and Euro by 10am, although it has fallen back a little since.

Note that tomorrow’s UK unemployment rate, released at 9.30am, could cause sterling to fall back further if the labour market is still struggling.