UK inflation accelerates, prompting traders to reduce bets on central bank rate cuts.

As a series of price increases hit households, the UK inflation rate has leaped to its highest level in over a year, exceeding expectations and prompting investors to reduce their bets on a rate cut by the Bank of England. The UK National Statistics Office said on Wednesday that energy, water, and other regulated prices rising pushed the inflation rate from 2.6% in previous months to 3.5% in April. This figure is higher than the Bank of England's forecast of 3.4% and economists' expectations of 3.3%. Service sector inflation accelerated from 4.7% to 5.4%. The central bank had previously forecasted 5%. The Bank of England closely monitors this indicator for signs of underlying price pressure. Core inflation rose to 3.8%, its highest level since April last year. Traders sharply reduced their bets on further rate cuts, expecting only one more cut before the end of the year. The market also sees a 40% chance of a rate cut in August, down from 60% before the data was released. The pound rose by 0.5% to $1.3461, its highest level since February 2022.