Sterling rallied across the board on 15 July as all the measures of consumer price inflation released on the day surprised markets on the higher side in a big way, strengthening the case for a rate hike sooner rather than later by the Bank of England, as its chief warned last month.

BoE governor Mark Carney parried inquiries by the Treasury Select Committee shortly after the inflation data added to the pound's gains, and the currency is back near the multi-year highs it had reached earlier this month against the dollar, euro, the Swiss franc and the yen.

Carney said housing is the biggest risk to UK recovery in medium term and added that UK inflation expectations are well anchored. He also said that rising rates are sign of an improving economy.

GBP/USD jumped to 1.7147 from near 1.7073 following the CPI release at 8:30 GMT, continued higher during the Carney testimony and made a 15-pips jump around 12:05 GMT to 1.7174, just 7 pips below the near six-year high touched on 4 July.

From the previous close, the pair has rallied about 0.54% to the day's high.

EUR/GBP fell to 0.7926, down 0.58% from the previous close, and closer to the 4 July multi-year low of 0.7914.

Lower than expected ZEW indexes for July from Eurozone and Germany aggravated the euro's weakness and weighed the cross further lower.

GBP/JPY jumped 0.57% to 174.46 — 175.43 on 4 July and GBP/CHF 0.54% to 1.5319 with the recent multi-year highs of the crosses being 175.43 and 1.5368 respectively.

Consumer price inflation rose to 1.9% year-on-year in June after rising 1.5% in May while analysts had been expecting a rise of 1.6%. The monthly headline increased 0.2% against the consensus of a repetition of May month's 0.1% drop.

The year-on-year core measure came at 2.0%, beating market forecast of 1.7% and sharply above the May figure of 1.6%.