Sterling stronger following two-day decline

Sterling strengthened after a two-day, 2.6 percent decline as inflation jumped above the 2 percent target set by the Bank of England last month.

This lowered the chances that the Bank will cut interest rates soon, although UBS said Monday that it thinks UK rates will drop three times next year.

A pound was worth $2.0692 in afternoon trade, while it bought €1.4184, A$2.3218 and SFr2.3321.

The yen weakened Tuesday after the Bank of Japan held interest rates there at 0.5 percent and carry trades became popular again as investors regained an appetite for risk.

In afternoon trade in New York, the yen traded at ¥110.7150 to the US dollar, while it stood at ¥161.5164 to the euro, at ¥229.0913 to the pound and at ¥98.6692 to the Australian dollar.

The Swiss franc, meanwhile, saw its worst one-day decline in two weeks in relation to the euro, trading at SFr1.6442 to the euro in afternoon trade in New York.

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