2023.03.2209:17:00UTC+00Hot U.K. Inflation Data Lifts Pound

The pound was higher against its major counterparts in the European session on Wednesday, as the nation's consumer inflation exceeded expectations in February, raising expectations for a quarter-point rate increase by the Bank of England on Thursday.

Data from the Office for National Statistics showed that consumer prices increased 10.4 percent year-on-year in February, following the 10.1 percent rise in the previous month.

The rate was expected to slow to 9.9 percent.

Core inflation jumped to 6.2 percent in February from 5.8 percent last month. Economists had expected an increase of 5.7 percent.

On a monthly basis, consumer prices climbed 1.1 percent in February, reversing a 0.6 percent fall in the previous month. That was above the 0.6 percent rise expected by economists.

The BoE's interest rate decision is due on Thursday, with investors pricing in a 25 basis point hike to 4.25 percent.

The pound strengthened to 0.8772 against the euro and 1.1334 against the franc, off its early lows of 0.8819 and 1.1253, respectively. The currency is seen finding resistance around 0.84 against the euro and 1.19 against the franc.

The pound was up against the dollar, at 1.2279. The pound is likely to find resistance around the 1.26 level.

The pound moved up to 162.72 against the yen, setting a 1-week high. If the pound continues its rise, 166.00 is possibly seen as its next resistance level.

Looking ahead, Canada new housing price index for February is set for release in the New York session.

At 2:00 pm ET, the Fed announces its decision on interest rate. The central bank is expected to raise the target range for the federal funds rate by 25 basis points to 4.75 percent to 5.00 percent.