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Pound Drifts Lower amid Resilient Growth and Surging Prices


LONDON, March 24 (Reuters) - Sterling traded lower against the dollar on Thursday after data showed British business activity remained buoyant in March amid surging prices.

Britain's private sector reported the steepest rise in prices charged by companies since at least 1999 while the S&P Global/CIPS composite Purchasing Managers' Index (PMI), a gauge of economic growth, edged down just slightly to 59.7 from a historically high 59.9 in February.

The data, however, didn't change the direction of travel for the British currency which was 0.17% lower against the dollar at $1.3128.

The pound recouped some early morning losses against the euro though and was flat against the common currency after hitting a two-week high on Wednesday. .

"I would be wary of buying into the better headline aggressively", commented Jeremy Stretch, head of G10 FX strategy at CIBC, noting that there were still a lot of uncertainties as to how inflation would cut into the disposable income of British consumers.

British finance minister Rishi Sunak cut fuel duty and softened some of a looming payroll tax increase on Wednesday as he sought to alleviate a severe cost-of-living squeeze against the backdrop of slowing economic growth. 

But with inflation set to hit a 40-year high of nearly 9% later this year, government forecasters said Britons faced the biggest hit to their living standards since records began in the late 1950s - even after Sunak's measures.

The greenback received a lift on Wednesday when U.S. Federal Reserve policymakers signalled that they could take more aggressive action to bring down inflation, including a possible half-percentage-point interest rate hike at the next policy meeting in May. 

The Bank of England hiked its interest rate by 25 basis points on Thursday but signalled a possible slower pace of tightening. 

Reporting by Julien Ponthus; Editing by Toby Chopra

Source: Reuters

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