Pound surges on BoE report as higher CPI points to rate hike

Sterling's rebound against the dollar from yesterday's low of $1.6315 extended about 80 pips to reach fresh week-highs of $1.6485 just after this morning's quarterly inflation report. Bank governor Mervyn King used the report to reiterate CPI inflation is likely to rise above 5% this year, with higher than forecast energy prices hitting consumers and pushing up forward projections. "It is more likely than not to remain above the 2% target throughout 2012," he said. Higher CPI increases the pressure on the Bank to raise rates sooner rather than later, though King has cautioned a ris...