Pound Strengthens After Better Than Forecast UK inflation data
The pound spiked up against its major counterparts in the European session on Tuesday as the UK inflation has improved more than expected in January, strengthens the expectations for the Bank of England to increase interest rates in may.
Data from the office for National statistics that inflation came in at 3 percent in January, up 2.9 per cent estimated by economists.
The interest rate was unchanged from the previous month.
Core inflation that excludes energy, food, alcoholic beverages and tobacco, accelerated to 2.7 percent from 2.5 percent in December. The rate was also above the expected 2.6%.
On a monthly basis, consumer prices fell by 0.5 percent compared to expectations of a 0.6 percent decline.
Separate data showed that British house prices inflation accelerated slightly in December, after the slowdown in the previous month.
The house price index climbed by 5.2 per cent compared to the previous year. December, faster than the 5.0 percent in November, which was down from a revised 5.1 percent increase reported earlier.
In the meantime, is relaxed, the output price inflation to 2.8 percent in January from 3.3 percent a month ago. The rate was expected to moderate to 3 percent.
Similarly, input price inflation slowed to 4.7 percent from 5.4 percent in the previous month. The prices were forecasted to gain 4.1 percent.
Month-on-month, producer prices rose slightly by 0.1 per cent and input prices rose by 0.7 per cent.
The pound weakened against the major opponents in the Asian session, with the exception of the greenback.
The pound strengthened to a 4-day high of 1.3913 against the greenback, from a low of 1.3832 seen at 8:15 pm ET. The pound is ready to challenge resistance around the 1.43 level.
After a 4-day low of 1.2937 hit to 3:00 PM ET, the pound in the opposite direction. and expanded to 1.3012 against the Swiss franc. Next key resistance for the pound is likely seen around the 1.32 area.
Fallen to a 6-day low of 0.8897 against the euro at 2:00 am ET, the pound bounced off to 0.8858. If the pound rise extends, 0.86 is seen as its next resistance.
The pound recovered some of its lost ground against the yen with pair trading at 149.65. Earlier, the pound and a 4-day low of 148.98 against the Japanese currency. On the other hand, 153.00 may be as the next resistance for the pound.
Data from the Bank of Japan showed that Japan picked up the producer prices of 0.3 percent on month in January.
This was revised in line with expectations and down by 0.1 percent in December.
Looking to the future, at 8:00 am ET Cleveland Fed President Loretta Mester speaks on the economic Outlook and monetary policy at the Dayton Area Chamber of Commerce Government Affairs Breakfast.