Pound Declines As U.K. Inflation Eases More Than Expected

(RTTNews) - The pound was lower on Wednesday, as the nation's consumer inflation slowed more than expected to a 15-month low in June, raising the possibility of a softening in the monetary policy outlook.

Data from the Office for National Statistics showed that the consumer price index, or CPI, posted an annual increase of 7.9 percent in June, which was slower than the 8.7 percent rise in May. This was the weakest rate since March 2022 and also below economists' forecast of 8.2 percent.

Monthly consumer price inflation eased more than expected to 0.1 percent from 0.7 percent in May. The expected rate was 0.4 percent.

The core CPI that excludes energy, food, alcohol and tobacco rose 6.9 percent annually in June, which was slower than the 7.1 percent rise in May. That was the highest rate since March 1992.

Another report from the ONS showed that output prices registered the slowest annual growth since December 2020. Factory gate prices edged up 0.1 percent, following May's 2.7 percent increase. The rate was expected to ease to 0.5 percent.

Output prices slid 0.3 percent in June after falling 0.6 percent in May. Prices were forecast to drop 0.3 percent.

Input prices declined the most since August 2020, down 2.7 percent from a year ago, in contrast to the 0.4 percent rise in May. Prices were forecast to drop moderately by 1.6 percent.

Month-on-month, input prices decreased 1.3 percent following a 1.2 percent drop in May.

The GBP/JPY pair touched a 5-day low of 180.27. The pound may locate support around the 175.00 level.

The GBP/USD pair fell to a 1-week low of 1.2923. Should the currency falls further, it is likely to test support around the 1.27 region.

The GBP/CHF pair weakened to a 2-1/2-month low of 1.1087. On the downside, 1.09 is likely seen as its next support level.

The pound dropped to 0.8685 against the euro, its lowest level since May 29. Next key support for the pound is seen around the 0.88 level.

Looking ahead, U.S. building permits and housing starts for June are set for release in the New York session.