London — The British pound rebounded on Tuesday from post-election lows, as surging inflation sparked talk of possible interest rate increases. In midday London deals, the pound was higher at $1.2736 on official data showing British consumer inflation spiked to a near four-year peak of 2.9% in June. The Bank of England (BoE), led by governor Mark Carney and tasked with keeping inflation close to a 2% target, will announce its latest interest rate decision on Thursday. "This morning’s CPI [consumer price index] reading caused a brief spike in sterling, on hopes that robust inflation will persuade Carney and the BoE to think more seriously about the path towards higher interest rates," said analyst Chris Beauchamp at trading firm IG. While higher interest rates raise borrowing costs, they boost the return on savings. The BoE’s main lending rate stands at a record-low 0.25%. Inflation unexpectedly hit 2.9% in May, which was the highest level since June 2013. British inflation had held ...
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