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January 20, 2010    

Pound rises after Cadbury takeover

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by Kay Murchie
Pound rises after Cadbury takeover

The pound gained ground against the euro yesterday as US food giant Kraft announced its takeover of British confectioner Cadbury.

The pound rose to a four-month high to 1.1477 euros as the takeover reflected the attraction of overseas companies investing in the UK, according to analysts.

Furthermore, higher than expected inflation figures boosted the prospect that the Bank of England may raise interest rates in the short-term.

Yesterday the ONS announced that Consumer Price Inflation (CPI) rose at its fastest annual pace in 9 months in December.

CPI rose 0.6% in December on the month, taking the annual rate to 2.9%, up from 1.9% the previous month.

The Bank of England’s Governor, Mervyn King, has warned that inflation could rise sharply over the next few months with many expecting to exceed the 3% mark.

However, in a speech on Tuesday evening, the Governor said inflation should return to its target of 2% “in the medium term”.

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Tags: 4-month high, attraction, , Cadbury, , , , , Kraft, ,