A surprise dip in inflation triggered a sterling sell-off today as the pound’s see-saw week continued.
The fall in the Consumer Prices Index from 1.8% to a four-year low of 1.5% in May was far sharper than expected as shoppers reaped the benefit of a supermarket price war and air fares fell steeply following Easter.
The pound, which burst through the $1.70 mark for the first time in nearly five years this week, sank as much as half a cent against the dollar before settling 0.2 cents lower at $1.6964.
It comes after Governor Mark Carney’s warning that rates could rise “sooner than markets expect” sent shock waves through financial markets last week.
UKForex trader Alex Edwards said: “It will go some way to abating aggressive calls for a rate hike from the Bank.”
