The British pound rose on Wednesday against the euro and the dollar, driven by inflation. Inflation accelerated to 5.5% in January in the United Kingdom against 5.4% in December. It thus remains at a peak in thirty years, fueling fears related to the cost of living for households.

The British pound is recovering buoyed by stronger than expected UK inflation figures fueling expectations of future Bank of England rate hikes. Around 11:20 a.m., the pound gained 0.133% against the greenback, at 1.3556 dollars for a pound. According to the Bank of England (BoE), inflation is expected to rise further to peak at 7.25% in April, largely due to the energy surge, and then stay at 5% as the year progresses. In February, the BoE had already raised its key rate by 25 points to 0.5% in an attempt to counter inflation.