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LONDON (Reuters) - A market measure of long-term British inflation rose on Friday to its highest level since the end of 2013 at least as sterling took a dive on growing anxiety that Britain will opt for a "hard" exit from the European Union.
On Friday, the pound tumbled about 10 percent from levels around $1.2600 to $1.1378 GBP=D4 in a matter of minutes in thin early Asian trade.
The currency's weakness, which increases the cost of imports, has fuelled expectations for higher inflation.
The five-year, five-year breakeven inflation forward, a measure of long-term inflation expectations in Britain, rose to around 3.64 percent GBIL5YF5Y=R at 0833 GMT -- one of its highest levels since late 2013, according to Reuters data.
At 1148 GMT the forward stood at 3.58 percent.
British gilt yields also rose sharply.
The 10-year gilt yield GB10YT=RR was up 21 basis points this week at 0.96 percent and on track for the biggest one-week rise since August 2015.
Reporting by Dhara Ranasinghe, editing by David Milliken