The lift to sterling given by the prospect of a snap British election next month has, at least temporarily, broken a vicious circle of rapidly rising inflation that threatened to further undermine the economy and paint the central bank into a corner. The currency's steep fall since June's Brexit referendum has aggravated inflation to 2.3 percent, above the Bank of England's 2 percent target, risking a drain on consumers' real spending power while tying the Bank of England's hands if further monetary easing were needed. The pound has traded in a range of roughly $1.20 to $1.27 to the dollar for the past six months and many analysts said they thought it was heading back towards the bottom of that range or even lower due to fears the two-year EU exit negotiating process would bring a sharp break with the bloc. British bond yields had been climbing on the inflation picture and the conundrum that would pose for policymakers, driving up the country's borrowing costs.
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