Daily FX European Market Outlook: The UK’s Inflation Rate pushes above the Bank of England’s 2%

The UK’s latest inflation rate pushes above the Bank of England's 2% thanks to rising fuel and food prices. The figures now sit at 2.3%, the highest since September 2013. Sterling weakness has contributed to this gain with food prices recording their first annual increase for more than two-and-a-half years, standing 0.3% higher in February than a year earlier. Looking ahead. The Bank of England expects inflation will peak at 2.8% next year. This reading has sparks speculation that a central bank rate rise could soon be on the agenda. In response Sterling hit a three-week high on the back of this report. Technically, the pound’s exchange rate against the dollar has today broken to the upside from a falling channel it had been in since the start of February. The ONS also reported that the UK’s public sector net borrowing fell to the lowest figure in 10 years. It dropped £2.8bn to £1.8bn last month and government borrowing marked the lowest year-to-date borrowing figure since February 2008. Meanwhile corporation tax and National Insurance contributions rose. Oil prices are gained during the European session on unconfirmed reports that an OPEC-led output cut would be extended beyond June. {ANI} But these gains are being held back by the constant high crude inventory reports. The price of Brent crude has tumbled from 57 dollars a barrel at the start of this month but it has been recovering over the last few days and is now close to 52 dollars after a low only just above 50.