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Forex News: Pound Slides As U.K. Consumer Inflation Falls To

Pound Slides As U.K. Consumer Inflation Falls To 20-Month Low

12/19/2018 - 06:27:00 (RTTNews)

(RTTNews) - The pound declined against its major counterparts in the European session on Wednesday, after a data showed that UK consumer price inflation slowed to its lowest level in twenty months in November amid lower oil prices.

Data from the Office for National Statistics showed that the consumer price index rose 2.3 percent year-on-year following a 2.4 percent increase in October. The latest inflation rate was the lowest since March 2017, when inflation was at the same level.

On a month-on-month basis, the CPI edged up 0.2 percent in November, matching economists' expectations.

Core inflation, which excludes prices of energy, food, alcoholic beverages and tobacco, slowed to 1.8 from 1.9 percent in October. The easing was in line with economists' expectations.

Separate data showed that input price inflation nearly halved to 5.6 percent in November from 10.3 percent in October. Economists had expected a lower figure of 4.9 percent.

Output price inflation slowed to 3.1 percent from 3.3 percent, slightly above economists' prediction of 3 percent.

Another data showed that house price inflation eased to 2.7 percent from 3 percent in September. The latest increase was the smallest since July 2013, when prices rose at the same pace.

London house prices fell 1.7 percent in the year to October after a 1.8 percent drop in the year to September.

The currency traded mixed against its major counterparts in the Asian session. While it rose against the franc and the greenback, it held steady against the yen and the euro.

The pound weakened to a weekly low of 0.9018 against the euro, from a high of 0.8982 touched at 5:15 pm ET. The pound is seen finding resistance around the 0.92 level.

Data from the Federal Statistical Office showed that Germany's producer price inflation remained at its highest level in 19 months in November.

Producer prices rose 3.3 percent year-on-year in November, same as in October. Economists had expected a 3.1 percent increase. The pace of increase was the fastest since April 2017, when producer prices rose at the same rate. The pound, having advanced to 1.2679 against the greenback at 2:45 am ET, reversed direction and moved down to 1.2643. Next key resistance for the pound is seen around the 1.24 mark.

After rising to 142.54 against the yen at 8:30 pm ET, the pound pulled back to 142.00. The pound is likely to find resistance around the 139.00 level.

Data from the Ministry of Finance showed that Japan recorded a merchandise trade deficit of 737.3 billion yen in November.

That missed forecasts for a deficit of 630.0 billion yen following the 450.1 billion yen shortfall in October.

Although the pound fell back to 1.2536 against the franc following the data, the move was short lived with the pair bouncing off to 1.2574. If the pound rises further, 1.28 is possibly seen as its next resistance level.

Looking ahead, Canada CPI and U.S. existing home sales for November are set for release in the New York session.

At 2:00 pm ET, the Fed announces its decision on interest rate. The central bank is expected to raise its interest rate by a quarter-point to a range of 2.25 percent to 2.5 percent.

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