Pound Rises On Higher-Than-Expected UK Inflation Report

RTTNews | 814 days ago
Pound Rises On Higher-Than-Expected UK Inflation Report

(RTTNews) - The British pound strengthened against other major currencies in the European session on Wednesday, after data showed U.K. consumer prices rose more than anticipated in March.

Data from Office for National Statistics showed that the U.K. consumer prices logged an annual increase of 10.1 percent, but slower than the 10.4 percent in February. Prices were expected to climb by 9.8 percent.

Month-on-month, the consumer price index gained 0.8 percent. Although the rate was slower than the 1.1 percent increase in February, this was well above economists' forecast of 0.5 percent. Core inflation which excludes energy, food, alcoholic beverages, and tobacco, held steady at 6.2 percent in March.

Another report from the ONS showed that output prices posted an increase of 8.7 percent annually, slower than the 11.9 percent rise in February. Economists had forecast prices to climb 8.6 percent.

Input price inflation eased sharply to 7.6 percent in March from 12.8 percent in February. This was slightly above economists' forecast of 7.0 percent.

Traders expect BoE Governor Andrew Bailey to raise another 25 bps rate hike by the BOE next month, after the release of Wednesday's accelerated double-digit inflation figure and Tuesday's upbeat labor cost index report.

The pound showed mixed trading against its major rivals in the Asian trading today. While the pound rose against the yen and the euro, it fell against the U.S. dollar. Against the Swiss franc, the pound held steady.

In the European session today, the pound rose to more than a 4-month high of 167.91 against the yen, from an early low of 166.49. On the upside, 169.00 is seen as the next resistance level for the pound.

Against the U.S. dollar and the Swiss franc, the pound advanced to a 5-day high of 1.2472 and a 6-day high of 1.1192 from early lows of 1.2409 and 1.1124, respectively. If the pound extends its uptrend, it is likely to find resistance around 1.26 against the greenback and 1.15 against the franc.

Moving away from an early 2-day low of 0.8838 against the euro, the pound climbed to a 1-week high of 0.8791. The pound is likely to find support around the 0.86 level.

Looking ahead, Eurozone inflation data for March and construction output for February are due to be released at 5:00 am ET.

At 6:35 am ET, Philip R Lane, a member of the executive board of the ECB, is scheduled to speak at Enterprise Ireland Summit in Dublin.

In the New York session, Canada housing starts, and PPI for March, the U.S. EIA weekly crude oil data, and the U.S. Fed Beige book report are slated for release.

At 11:00 am ET, a member of the Executive Board of the ECB, Isabel Schnabel will provide a lecture at Leibniz-Zentrum für Europäische Wirtschaftsforschung in Mannheim, Germany.

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