Forex News: Pound Falls As UK CPI Rises Less-than-expected

Pound Falls As UK CPI Rises Less-than-expected

(RTTNews) - The British pound weakened against other major currencies in the European session on Wednesday, following the release of U.K. consumer inflation data in May.

Data from the Office for National Statistics showed that the U.K. consumer price inflation remained stable in May. Consumer prices registered an annual increase of 2.8 percent, the same rate as seen in April. Prices were expected to climb 3.0 percent.

Meanwhile, core inflation rose to 2.6 percent from 2.5 percent in the previous month. Nonetheless, the rate was slightly below forecast of 2.7 percent.

Factory gate inflation slowed marginally to 4.0 percent in May from 4.1 percent a month ago, the ONS said in a separate communiqué.

On the other hand, input price inflation accelerated to the highest since February 2023. Input prices grew 8.7 percent after rising 7.9 percent in April.

On a monthly basis, output prices climbed 0.5 percent, slower than the 1.5 percent rise in April. At the same time, input prices gained only 0.2 percent, following April's 2.6 percent increase.

Investors remain cautious as they seek more clarity on the U.S.-Iran interim peace deal and await the U.S. Federal Reserve's interest-rate decision later in the day for new insights on policy signals under the new Fed Chair.

Oil prices hovered near three-month lows, helping ease worries about inflation and the outlook for interest rates.

That said, investors await more clarity on the U.S.-Iran interim peace deal that will be formally signed on Friday in Switzerland.

According to Bloomberg, Iran could have access to up to $300 billion in reconstruction funds as part of its agreement with the United States.

The proposed agreement could unlock billions in frozen Iranian assets and allow the country to immediately begin selling oil and fuel.

In the European trading today, the pound fell to nearly a 2-week low of 0.8656 against the euro and a 9-day low of 1.0614 against the Swiss franc, from an early high of 0.8645 and 1.0650, respectively. If the pound extends its downtrend, it is likely to find support around 0.87 against the euro and 1.05 against the franc.

Against the yen and the U.S. dollar, the pound edged down to 214.92 and 1.3409 from an early high of 215.44 and 1.3436, respectively. The pound may test support near 212.00 against the yen and 1.33 against the greenback.

Looking ahead, Eurozone CPI data for May is due to be released in the European session.

In the New York session, U.S. MBA weekly mortgage approvals data, Canada new housing price index for May, U.S. retail sales for May, business inventories for April, pending home sales for May and U.S. EIA crude oil data are slated for release.

At 2:00 pm ET, the Federal Reserve (Fed) is set to announce its monetary policy decision. The central bank is expected to maintain its benchmark interest rate in the range of 3.50% to 3.75%.

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