Sterling strengthens ahead of BoE inflation report

The pound has gained against the euro ahead of Wednesday's Bank of England inflation report, which is expected to show inflation has hit over 4%, increasing pressure on the Bank to cut rates.

Sterling strengthened by 0.7% to 84.06 pence against the euro this morning and gained 0.1% against the dollar to $1.6026. Economists say the pound is rising due to market concerns the Bank will hike interest rates on the back of rising inflation. CPI figures for January, released tomorrow, are expected to show a 4% rise from a year earlier, doubling the 2% target increase and marking the fastest rise since 2008. Pressure continues to mount on Mervyn King, the Bank's governor, to explain why he has kept interest rates at 0.5% for two years. Meanwhile, business secretary Vince Cab...