Forex News: Pound Climbs As UK Inflation Rises

Pound Climbs As UK Inflation Rises

(RTTNews) - The British pound strengthened against other major currencies in the European session on Wednesday, after the British consumer price inflation increased in March to the highest level in three months, driven mainly by higher transport costs.

Data published by the Office for National Statistics showed that the consumer price index climbed 3.3 percent year-on-year in March, faster than February's 3.0 percent stable increase. That was in line with expectations.

Core inflation that excludes prices of energy, food, alcohol, and tobacco eased slightly to 3.1 percent from 3.2 percent in the prior month.

Inflation based on transportation accelerated to 4.7 percent from 2.4 percent, and the annual price growth in food and non-alcoholic beverages quickened to 3.7 percent from 3.3 percent. Meanwhile, clothing and footwear prices were 0.8 percent less expensive.

On a monthly basis, consumer prices moved up 0.7 percent after rising 0.4 percent in February. The expected rate was 0.6 percent.

Another report from the ONS showed that input prices climbed 5.4 percent year-on-year in March, much faster than the 0.7 percent increase in the prior month. On a monthly comparison, input prices rose 4.4 percent, following a 0.9 percent gain in February.

The output price inflation rose to 2.6 percent from 1.8 percent in February. Month-on-month, output prices rebounded 0.9 after falling 0.5 percent in the previous month.

Meanwhile, the European stocks subdued after U.S.-Iran peace talks stalled, and U.S. President Donald Trump announced a unilateral extension of the ceasefire amid renewed conflict in the Strait of Hormuz.

In the European trading today, the pound rose to an 8-day high of 0.8685 against the euro, a 5-day high of 215.66 against the yen and a 2-day high of 1.0558 against the Swiss franc, from early lows of 0.8702, 215.09 and 1.0536, respectively. If the pound extends its uptrend, it is likely to find resistance around 0.85 against the euro, 216.00 against the yen and 1.06 against the franc.

Against the U.S. dollar, the pound edged up to 1.3535 from an early low of 1.3498. The pound is likely to find resistance around the 1.39 region.

Looking ahead, U.S. MBA weekly mortgage approvals data, Canada new housing price index for March, Eurozone flash consumer confidence for April and U.S. EIA crude oil data are slated for release in the New York session.

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