Pound Extends Slide As U.K. Inflation Eases
18 July 2017 - 3:08PM
RTTF2
The British pound continued to be weak against other major
currencies in the early European session on Tuesday, after data
showed that U.K. inflation slowed to a three-month low in June.
Data from the Office for National Statistics showed that U.K.
inflation slowed to a three-month low in June. Consumer prices
advanced 2.6 percent year-on-year in June, following a 2.9 percent
rise in May. Inflation was expected to remain unchanged at 2.9
percent.
Month-on-month, overall consumer prices remained flat, while
economists expected a 0.2 percent gain.
Another report from the ONS showed that output price inflation
fell more-than-expected to 3.3 percent annually from 3.6 percent in
May. The expected rate was 3.4 percent. This was the slowest rate
since December 2016.
At the same time, input price inflation came in at 9.9 percent
compared to 12.1 percent a month ago. However, it was faster than
the 9.3 percent forecast. June's 9.9 percent increase was the
slowest the rate has grown since September 2016 when it was 7.6
percent.
On a monthly basis, output prices remained unchanged and input
prices slid 0.4 percent.
European stocks traded lower on U.S. healthcare bill woes after
two more Republicans opposed a revised version of the bill. Caution
ahead of BOJ and ECB meetings due this week may also keep investors
on the sidelines.
No big changes are expected from the European Central Bank and
the Bank of Japan when they meet to review their monetary policies
on Thursday.
Meanwhile, Brexit minister David Davis met EU negotiator Michel
Barnier for a second round of talks in Brussels on Monday, with key
issues surrounding Britain's withdrawal, including citizens' rights
and its exit bill, on top of the agenda.
In the Asian trading today, the pound had fallen against its
major rivals.
In the European trading, the pound fell to a 4-day low of 1.3019
against the U.S. dollar, from an early 10-month high of 1.3125. On
the downside, 1.28 is seen as the next support level for the
pound.
The pound dropped to a 4-day low of 146.18 against the yen, from
an early high of 147.32. The pound may tests support near the
142.00 region.
Against the euro and the Swiss franc, the pound slipped to 5-day
lows of 0.8849 and 1.2465 from early highs of 0.8781 and 1.2582,
respectively. If the pound extends its downtrend, it is likely to
find support around 0.89 against the euro and 1.23 against the
franc.
Looking ahead, U.S. import price index for June and U.S. NAHB
housing market index for July are slated for release in the New
York session.
At 9:30 am ET, Bank of England Governor Mark Carney is expected
to speak at the unveil of the new £10 note, in Hampshire.
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