The pound advanced against its major trading partners in the European session on Wednesday, as U.K. consumer inflation accelerated to a six-month high in January, supporting hopes that the Bank of England would keep rate unchanged in near term.

Data from the Office for National Statistics showed that inflation improved to 1.8 percent in January from 1.3 percent in December. Economists had expected a 1.6 percent rise.

On a monthly basis, consumer prices fell 0.3 percent after remaining flat in the previous month. The rate was forecast to fall by 0.4 percent.

Another report from ONS showed that output price inflation accelerated to 1.1 percent in January from 0.9 percent in December.

Month-on-month, output inflation was 0.3 percent in January, compared to a flat reading in December.

Input prices rose to 2.1 percent in January from 0.9 percent in December.

On a monthly basis, input price inflation remained unchanged at 0.9 percent in January.

Sentiment was underpinned by a fall in the number of new coronavirus cases in China.

Markets also remain hopeful that China will cut its benchmark loan prime rate Thursday to offset the economic damage caused by the coronavirus outbreak.

The currency exhibited mixed trading in the Asian session. The currency advanced against the yen but held steady against the euro and the franc. Versus the dollar, it dropped.

Extending early rally, the pound spiked up to nearly a 4-week high of 143.51 against the yen. The GBP/JPY pair had ended yesterday's trading session at 142.77. Immediate resistance for the pound is possibly seen around the 145.00 level.

Data from the Ministry of Finance showed that Japan posted a merchandise trade deficit of 1,312.6 billion yen in January.

That beat estimates for a shortfall of 1,684.8 billion yen following the 154.6 billion yen deficit in December.

The pound was up against the franc at 1.2811, gaining 0.4 percent from a low of 1.2762 set at 4:15 am ET. Next key resistance for the pound is likely seen around the 1.30 level.

Following a brief fall to 1.2975 at 4:15 am ET, the pound bounced back against the greenback, touching 1.3023. On the upside, resistance is seen near the 1.32 level.

The pound rose against the euro, with the EUR/GBP pair reaching 0.8295. The pound is likely to face resistance around the 0.80 region, if it gains again.

Looking ahead, at 8:30 am ET, Canada CPI for January will be published.

At the same time, U.S. housing starts, building permits and producer price index, all for January, are due out.

The Federal Reserve will release minutes from its January 28-29 meeting at 2:00 pm ET.

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