The British pound edged slightly higher to $1.28, approaching levels not seen since April last year, after the Bank of England raised the key interest rate by 50bps to 5%, compared to expectations from most investors of a smaller 25bps hike.

However, a higher-than-expected inflation print for May released Wednesday raised the odds of a higher hike.

In May, the headline inflation rate remained unchanged at 8.7%, slightly above the projected 8.4% and surpassing the policymakers’ target of 2%.

Additionally, the core inflation rate accelerated to 7.1%, reaching its highest level since March 1992.