Higher than expected inflation figures in the UK have fuelled speculation of a further interest rate rise boosting sterling to a three week high against the dollar.

This morning the dollar was at 1.9622 to sterling while the pound bought
1.4745 euros.

Data from the Office for National Statistics showed consumer price inflation rose to an annual 2.8 per cent in February. The Bank of England's target is two per cent.

Meanwhile, retail price inflation rose to its highest since August 1991, and stands at 4.6 per cent.

"It's another sign that inflation pressures are being persistent," James Knightley, an economist at ING Financial Markets, told Economic News.

"It increases the possibility of another rate rise from the Bank of England. I think what we'll see is a 25 basis-point increase in April."