Investing.com - The pound held above the $1.22 level on Tuesday after data showing that the cost of living in the U.K. rose at the fastest rate in 22 months in September, amid a sharp fall in sterling in the aftermath of the June 23 Brexit vote.
GBP/USD hit highs of 1.2275 and was last at 1.2252, up 0.57% for the day.
The Office for National Statistics reported that the U.K. consumer price index jumped to 1% in September, above forecasts for a 0.9% increase from 0.6% in August.
It was the highest inflation rate since November 2014.
The increase was mainly driven by a 6% jump in clothing prices and higher fuel costs, the ONS said, but noted that there was little explicit evidence that the weaker pound was pushing up prices.
Sterling has fallen around 20% against the dollar and around 16% against the euro in the aftermath of the Brexit vote.
Consumer prices rose 0.2% from a month earlier in September, compared to expectations for a 0.1% advance and the prior month’s 0.3% increase.
Core inflation, which excludes food and fuel costs rose by an annualized 1.5% last month, above forecasts for a gain of 1.4% and compared to the 1.3% advance in August.
The Bank of England is due to release new inflation forecasts in November.
BoE Governor Mark Carney last week said the central bank could tolerate "a bit" of an overshoot on its 2% inflation target, after the bank forecast a sharp pick-up in inflation in August, due to the slump in the pound.
EUR/GBP was down 0.37% at 0.8990 from around 0.8996 earlier.