Pound Recovers Slightly After U.K. CPI Data

(RTTNews) - The British pound recovered slightly from an early low against other major currencies in the European session on Wednesday, following the release of U.K. consumer price inflation data in May.

Data from the Office for National Statistics showed that the U.K. consumer price index registered an annual increase of 3.4 percent, slightly slower than the 3.5 percent rise seen in April. However, inflation was slightly above forecast of 3.3 percent.

On a monthly basis, the consumer price index gained only 0.2 percent, much slower than the 1.2 percent rise seen in April.

Core inflation that strips out prices of energy, food, alcohol and tobacco eased to 3.5 percent, in line with expectations, from 3.8 percent in the previous month.

It is expected that the inflation figures will demonstrate that pricing pressures have subsided. The Bank of England (BoE) is also anticipated to maintain interest rates at 4.25% on Thursday.

Traders await the U.S. Federal Reserve's (Fed) monetary policy decision due later in the day. Some traders anticipate that there is an 80% chance that the Fed will drop rates in September and then again in October.

Amid ongoing uncertainty around tariffs and escalating geopolitical tensions, traders will be intently monitoring the Federal Open Market Committee's (FOMC) monetary policy statement in search of forward direction.

The British sterling fell against its major peers in the Asian trading today.

In the European trading today, the pound rose to 0.8547 against the euro and 195.34 against the pound, from an early near 2-month low of 0.8560 and a 5-day low of 194.78, respectively. If the pound extends its uptrend, it is likely to find resistance around 0.84 against the euro and 198.00 against the yen.

Against the U.S. dollar and the Swiss franc, the pound edged up to 1.3476 and 1.1001 from early lows of 1.3427 and 1.0967, respectively. The pound may test resistance around 1.37 against the greenback and 1.12 against the franc.

Looking ahead, U.K. house price data for April and Eurozone final inflation figures for May are slated for release in the European session.

In the New York session, U.S. MBA mortgage approvals data, U.S. building permits and housing starts for May, U.S. weekly jobless claims data and U.S. EIA crude oil data are set to be published.

At 2:00 pm ET, the U.S. Federal Reserve (Fed) will announce its monetary policy decision. The central bank expects the interest rate to remain unchanged at 4.5 percent.