Inflation by several measures jumped sharply in April, sending sterling up against the dollar and raising concerns among investors as to the timing and pace of any reductions in UK rates.
Official Office for National Statistics figures show the Consumer Prices Index went up to a 3.5% annualised rate. However, the Consumer Prices Index including owner occupiers' housing costs (CPIH) ran at a rate of 4.1%, up 1.5% over the month.
Reacting, Nigel Green, CEO of deVere Group said in reaction to the latest inflation data and the recent cut to rates by the Bank of England: "The pound’s reaction was swift—a clear signal that markets are reassessing UK risk exposure in light of the data. This move from the Bank looks increasingly difficult to defend. Slashing rates just as inflation reignites sends conflicting signals and risks making conditions worse for the very households and businesses it’s trying to support."
"For millions of households, this marks yet another setback. Despite some mortgage relief from the rate cut, any gains are being eroded by rising food bills, higher transport costs and elevated rents. Energy remains a burden, especially for lower-income families who had expected real relief heading into the summer. This disconnect weakens confidence and risks deepening the sense of economic instability.
"The cost of inaction is high—but so is the cost of miscalculation. The central bank’s credibility matters, and if it looks like it moved too early, it may lose the trust of the private sector it’s meant to support.
"Gilts are now under scrutiny. Equities, previously buoyed by hopes of lower borrowing costs, may now face volatility as markets reassess inflation-linked earnings risk. The FTSE had been positioned as a value opportunity—but that view may not hold if inflation forces policy reversal.
"This development lands in a global environment where investors are already watching for signs of divergence between central banks. The BoE’s decision stands in stark contrast to the Federal Reserve’s more cautious stance. The divergence could reshape flows, particularly in FX and fixed income.
"Unless May’s figures show a sharp reversal, the BoE may have to pause further cuts—or face the much harder decision of reversing course entirely. The window for a soft landing is narrowing. Sterling’s rebound reflects more than a one-off reaction to inflation data—it signals unease. Investors are asking whether the BoE moved with enough conviction and whether it truly has control of the inflation trajectory"
"Monetary policy needs precision. The Bank of England must now demonstrate that it hasn’t lost the plot, and that it still has the tools and the resolve to restore price stability."
Daniel Austin, CEO and Co-Founder at specialist property lender ASK Partners, said: "Today’s sharp rise in UK inflation demonstrates how the balancing act between volatile global conditions, driven by Trump-era tariff uncertainty and domestic tax shifts, is becoming harder to maintain. Many will be asking whether the Bank of England’s rate pause can hold."
"For homeowners and buyers, hopes of lower borrowing costs remain high, but persistently elevated fixed mortgage rates could delay any real relief. While house prices have stalled since the end of the stamp duty holiday, any drop in swap rates, sparked by Trump-related volatility, could revive momentum if it feeds into better affordability.
"Investors and developers are watching closely. Appetite remains strong in resilient sectors like co-living and build-to-rent, where supply constraints keep capital active. But a stable, downward rate trajectory is key. If rate cuts come, it could reignite activity, but with uncertainty and costs still high, staying nimble is essential."
Sarah Coles, Head of Personal Finance, Hargreaves Lansdown, was more direct in her assessment: "Inflation is back with a bang: like an unwanted house guest, breaking down the door, emptying the fridge and bleeding you dry. The spike in prices is the biggest we’ve seen since the cost-of-living crisis, and even larger than had been forecast. It demonstrates just how awful April was this year for our pockets. Unfortunately, there’s every sign this unwanted guest could end up sticking around for months."
