FTSE 100 retreats from fresh 14-month high after inflation rises 0.6pc

European bourses fall back from seven-week high

Pound spikes towards $1.30 on better-than-expected inflation data

UK inflation hits 0.6pc after Brexit; its highest level since November 2014

US inflation falls to 0.8pc in July

September US rate rise still 'possible', says Fed's Dudley

UK inflation hits 0.6pc after Brexit vote

Inflation picked up in July in the wake of the Brexit vote, in what is the first hint that the sharp plunge in the pound following the referendum vote is driving prices higher.

Consumer prices increased by 0.6pc over the last 12 months, up from 0.5pc in June and hitting the highest level since November 2014, according to the Office for National Statistics. It also came in ahead of consensus forecasts of a 0.5pc rise. However, the ONS cautioned, the 0.6pc rise is "still relatively low in the historic context".

The main contributors to the increase in the rate were rising prices for motor fuels, alcoholic beverages and accommodation services, and a smaller fall in food prices than a year ago. These upward pressures were partially offset by falls in social housing rent, and falling prices for certain games and toys.

Pound breaks $1.30 on better-than-expected UK inflation data

The better-expected-inflation data caused the pound spiked by as much as 1.3pc to an intraday high of $1.3038 against the dollar. Earlier in the day, it stumbled to an intraday low of $1.2872, nearing its post-Brexit lows, amid expectations of further stimulus from the Bank of England.

The pound has been in decline for nine consecutive trading sessions since the Bank of England slashed interest rates to record lows and announced a bond buying programme in the wake of the Brexit vote.

US rate hike possible in September, says Fed's Dudley

The Federal Reserve could possibly raise US interest rates next month, according to New York Fed President William Dudley, as the labor market tightens.

In an interview with Fox Business Network, Dudley said: "We're edging closer towards the point in time where it will be appropriate I think to raise interest rates further."

He added policy makers will have to see "where the data falls" but he reckons "it's possible" to hike interest rates at the mid-September meeting.