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The pound has strengthened against the euro this morning following higher-than-expected inflation figures.

The final inflation reading for December came in at 5.4% year-on-year, greater than estimates of 5.2% and the highest since March 1992. The month-on-month figure was also higher than expected, coming in at 0.5%. Rising energy prices, supply chain disruptions and the cost of food and non-alcoholic beverages have contributed towards the high figure.

This high reading has increased expectations for a Bank of England interest rate hike at the next monetary policy meeting in February. This has caused sterling to strengthen.

The next set of data for the UK will be on Friday, when retail sales and consumer confidence figures will be released.

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