Pound Rises As U.K. Consumer Price Inflation Hits 2-1/2-year High
17 January 2017 - 4:15PM
RTTF2
The British pound strengthened against the other major
currencies in the early European session on Tuesday, after data
showed that U.K. inflation reached its highest level since July
2014 .
Data from the Office for National Statistics showed that U.K.
consumer price inflation increased more-than-expected to 1.6
percent in December from 1.2 percent in November. This was the
highest rate since July 2014 and above the expected rate of 1.4
percent.
Month-on-month, consumer prices advanced 0.5 percent versus 0.2
percent in the prior month. Prices were forecast to grow 0.3
percent.
The ONS data showed that output price inflation accelerated to
2.7 percent in December from 2.4 percent in November but slower
than the forecast of 2.9 percent. Month-on-month, output prices
edged up 0.1 percent each in December and November. Economists had
forecast a 0.4 percent rise.
Input prices again logged a double-digit growth in December, by
15.8 percent after rising 13.3 percent in November. Economists
forecast 15.5 percent increase. On a monthly basis, input prices
gained 1.8 percent, reversing a 0.6 percent drop in November.
Prices were expected to climb 2.4 percent.
Traders await the UK Prime Minister Theresa May's speech for
details about the United Kingdom's exit from the European
Union.
In the Asian trading today, the pound held steady against its
major rivals.
In the European trading, the pound rose to 4-day highs of 0.8759
against the euro and 1.2189 against the U.S. dollar, from early
lows of 0.8817 and 1.2018, respectively. If the pound extends its
uptrend, it is likely to find resistance around 0.86 against the
euro and 1.25 against the greenback.
Against the Swiss franc and the yen, the pound edged up to
1.2240 and 137.83 from early lows of 1.2148 and 137.06,
respectively. The pound may test resistance near 1.26 against the
franc and 145.00 against the yen.
Looking ahead, European Central Bank Governing Council Member
Ewald Nowotny takes part in a panel discussion on "euro reforms in
turbulent times", in Vienna at 6:00 am ET.
In the New York session, U.S. Empire State manufacturing index
for January is slated for release.
At 8:45 am ET, Federal Reserve Bank of New York President
William Dudley is expected to speak about consumer behavior at the
National Retail Federation Convention and Expo, in New York.
At 10:00 am ET, Federal Reserve Board Governor Lael Brainard is
expected to speak on monetary and fiscal policy before the
Brookings Institution, in Washington, U.S.
Subsequently, Federal Reserve Bank of San Francisco President
John Williams is expected to speak before the Sacramento Business
Review Economic Forecast event, in Sacramento, U.S.
Later in the day, the UK Prime Minister Theresa May is expected
to speak about details of the United Kingdom's exit from the
European Union, in London.
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