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The euro reached a five-month high against the dollar amid speculation the European Central Bank will raise interest rates next month and as stocks rose, lessening the appeal of safe-haven assets.
European Central Bank Executive Board member Gertrude Tumpel-Gugerell and Governing Council member Yves Mersch both said yesterday that “strong vigilance” is necessary to keep a lid on inflation.
“It’s a risk-on and monetary tightening story,” said Jeremy Stretch, executive director of foreign-exchange strategy at Canadian Imperial Bank of Commerce in London. “Euro-dollar is a beneficiary of that and looks like it’s going to continue to trade higher.”
The pound surged to the highest level in more than a year against the dollar as U.K. inflation accelerated more than economists forecast, renewing speculation the Bank of England will raise interest rates.
Sterling also appreciated versus the euro, while gilt yields jumped to the highest in a week. Consumer prices rose 4.4 percent in February from a year earlier, according to the Office for National Statistics, higher than the 4.2 percent median forecast of economists.
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