Tuesday 21 May 2013

GBP/USD hits session lows after weak U.K. inflation data


The pound fell to session lows against the dollar on Tuesday after data showed that U.K. consumer inflation fell for the first time since September last month.

GBP/USD hit 1.5174 during European morning trade, the session low; the pair subsequently consolidated at 1.5173, shedding 0.54%.

Cable was likely to find support at 1.5156, Friday’s low and a six-week low and resistance at 1.5276, the session high.


The Office for National Statistics said consumer price inflation came in at 2.4% in April, compared to expectations for a 2.6% increase and down from 2.8% in March.


Month-over-month, consumer price inflation rose 0.2%, below expectations for a 0.4% increase, after rising 0.3% in March.


Core CPI, which excludes volatile food and energy costs slowed to 2.0% from 2.4% in March. Analysts’ had expected core prices to tick down to 2.3%.


The ONS said lower petrol and diesel costs accounted for almost half the drop in the annual rate of inflation.


The ONS said the retail price index rose 2.9% in April compared to a year earlier.


The drop in inflation should give incoming Bank of England Governor Mark Carney more leeway to implement policy measure to bolster the U.K. economic recovery.


Sterling dropped to session lows against the euro, with
EUR/GBP advancing 0.44% to 0.8480.


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