The New York Fed's Survey of Consumer Expectations indicated that one-year inflation expectations rose to 3% in March, with gas price expectations jumping to 9%, the highest since March 2022.
The US dollar returned to the upside as geopolitical fears rebounded after US President Trump's address to the nation. The rhetoric fuelled risk aversion and flows toward the dollar while oil prices surged.
The geopolitical backdrop in the Middle East remained tense after renewed threats to Iranian infrastructure from President Donald Trump, although reports of a potential deal could limit the demand for the dollar.
With 2-year gilt yields hitting December highs due to a 40 per cent surge in UK gas prices and oil nearing $80, the Bank of England faces a significant inflationary shock. High-street banks are no longer competing on price but are instead protecting margins against rising swap rates.