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Forex News: Pound Falls As U.K. Consumer Inflation Remains Steady

Pound Falls As U.K. Consumer Inflation Remains Steady

06/13/2018 - 06:26:00 (RTTNews)

(RTTNews) - The pound slipped against its major counterparts in the European session on Wednesday, as U.K. consumer inflation remained at a one-year low in May.

Data from the Office for National Statistics showed that UK inflation remained stable in May.

Consumer price inflation held steady at 2.4 percent, the lowest since March 2017, and in line with expectations.

Month-on-month, consumer prices gained 0.4 percent in May, matching economists' expectations.

Core inflation that excludes energy, food, alcoholic beverages and tobacco, also remained stable in May, at 2.1 percent.

Separate data showed that input price inflation accelerated more-than-expected to 9.2 percent in May from 5.6 percent a month ago. Prices were forecast to rise 7.6 percent.

Likewise, monthly inflation advanced to 2.8 percent from 0.6 percent, and above the expected increase of 1.8 percent.

At the same time, output price inflation climbed to 2.9 percent annually, as expected, from 2.5 percent. Month-on-month, prices registered a steady increase of 0.4 percent, while economists had forecast a 0.3 percent rise.

British house price inflation eased further in April to the lowest level in just over a year.

The house price index climbed 3.9 percent year-over-year in April, slower than March's 4.2 percent rise.

Investors also awaited monetary policy announcements from three major central banks due this week.

The U.S. Federal Reserve is widely expected to raise interest rates by 25 basis points when it ends its two-day policy meeting later today.

On Thursday, the European Central Bank may outline plans for ending its bond purchasing program.

The currency showed mixed trading against its major rivals in the Asian session. While it held steady against the franc and the euro, it rose against the yen. Against the greenback, it dropped.

The pound dropped to an 8-day low of 1.3308 against the greenback, after rising to 1.3375 at 5:15 pm ET. The pound is seen finding support around the 1.32 region.

The pound depreciated to 1.3159 against the Swiss franc, down from a high of 1.3205 hit at 3:00 am ET. The next likely support for the pound is seen around the 1.29 level.

Data from the Federal Statistical Office showed that Switzerland's industrial production and turnover increased in the first quarter.

Industrial production advanced 9 percent on a yearly basis in the first quarter. Production climbed 7.1 percent in January, 11.3 percent in February and 11.2 percent in March.

Pulling away from an early high of 0.8779 against the euro, the pound declined to 0.8823. On the downside, 0.90 is possibly seen as the next support level for the pound.

Having advanced to 147.90 against the yen at 11:15 pm ET, the pound reversed direction and dropped to 147.21. If the pound falls further, 146.00 is likely seen as its next support level.

Looking ahead, U.S. PPI for May is scheduled for release in the New York session.

At 2:00 pm ET, the Fed announces its decision on interest rates. The Fed is widely expected to raise the federal funds rate by a quarter point to a range of 1.75 percent to 2 percent.

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