Pound (GBPUSD=X)

The pound rose slightly against the dollar in early European trading on Wednesday, up 0.1% to $1.2692. This comes after the latest UK inflation data came in hotter than expected, rising to 2.3% in October.

This latest consumer price index (CPI) reading followed a three-year low of 1.7% in September and was back above the Bank of England's 2% target.

While economists had anticipated a rise, warning that it was likely driven by higher energy costs after the energy price cap was raised for households in October, this increase in inflation was still higher than expected.

Inflation data is closely watched by the Bank of England (BoE), as it uses this to help guide its decisions on interest rates, so this latest reading has tempered market bets that of the central bank cutting rates once again in December.

BoE governor Andrew Bailey warned this week that the central bank would be forced to cut interest rates at a "gradual" pace as it evaluates the impact of the chancellor's decision to raise taxes on employers.

Read more: FTSE 100 LIVE: Stocks rise as UK inflation climbs above Bank of England target to 2.3%

Danni Hewson, head of financial analysis at AJ Bell, said that while this 2.3% increase was only slightly above of the BoE's target "it does disrupt a three-month downward trend and market expectation of a further interest rate cut in December is now only 16%, with almost half thinking that even February will be too early for the MPC [monetary policy committee] to cut again.

"The fact that core inflation edged up a touch, with the service sector the most watched part of that equation, will give the nine people on the committee pause for thought."

The pound was also higher against the euro (GBPEUR=X), up 0.3% to €1.1999.

Gold (GC=F)

Gold prices dipped slightly lower on Wednesday morning, easing back after a rebound in the previous session amid geopolitical concerns.

Spot gold fell 0.3% to $2,625 per ounce, while US gold futures were down by 0.1% to $2,627 per ounce at the time of writing.

Concerns of an escalation in the Russia-Ukraine conflict weighed on markets in the previous session, particularly following the US decision to permit Ukraine to carry out long-range missile strikes on Russian targets.

In a note on Wednesday, Deutsche Bank strategists said: "The escalation news immediately led to a significant move into perceived safe havens, with assets like gold, sovereign bonds and the Japanese yen all advancing."

Read more: Inflation increases to 2.3% in October after energy bills rise