LONDON, Aug 16 Reuters The British pound was set for its biggest oneday rise against the dollar in a weekandahalf on Wednesday, as latest UK inflation numbers reinforced bets that the Bank of England will likely hike interest rates again.

Consumer price inflation slowed to 6.8 in July. But core inflation, which strips out volatile food and energy prices, remained at 6.9 in July, flat versus the June reading, and higher than economist expectations for a reading of 6.8.

Services inflation picked up to 7.4 from 7.2 in June.

Sterling was last up 0.3 against the dollar at 1.2736 and set for its biggest oneday jump since Aug 7.

It rose 0.1 against the euro, with the single currency last buying 85.75 pence .

Core inflation remains stubbornly high at 6.9 and is now slightly above the headline level, said Oliver Blackbourn, Multi Asset Portfolio Manager at Janus Henderson Investors.

This presents a headache for the Bank of England as it will want to see this less volatile measure decline to suggest that cost pressures are sustainably returning to target.

Data on Tuesday showed British wages grew at a record pace in the second quarter, adding to the BoE39;s inflation worries.

Money market traders now fully price a 25 basis points bps hike at the central bank39;s next meeting in September, with around a 10 chance of a larger halfpoint rate rise.

Markets also price in a total of 75 bps of tightening by the February 2024 meeting, implying the BoE39;s bank rate would hit 6,…