UK Inflation Surges Amid Rising Petrol Costs, Dollar Poised for Fed Rate Hike

The UK's inflation rate rose to 3.1% in August, its highest level since March, driven by higher petrol costs and airfares.

The pound was little changed following the data, with expectations surrounding Bank of England (BoE) rate hikes remaining unchanged.

However, BoE Governor Andrew Bailey warned that new risks are emerging, including rising food prices due to challenging domestic weather conditions and the impact of Super El Niño.

In contrast, the U.S. dollar is expected to benefit from a 25-basis-point rate hike by the Federal Reserve (Fed), although this move is almost fully priced in.