Pound Rises As U.K. Inflation Eases To 2% Target
23:57, 18th June 2024
(RTTNews) - The British pound strengthened against other major currencies in the European session on Wednesday, after U.K. consumer price inflation eased to the 2 percent target for the first time in nearly three years.
Data from the Office for National Statistics showed that the consumer price inflation softened to 2.0 percent in May, as expected, from 2.3 percent in April. Inflation reached the target for the first time since July 2021.
On a monthly basis, consumer prices gained 0.3 percent in May, the same rate as seen in April. Prices were expected to climb 0.4 percent.
Another data from the ONS showed that factory gate prices rose 1.7 percent year-on-year in May, up from an increase of 1.1 percent in April.
Meanwhile, monthly output prices fell unexpectedly by 0.1 percent in May, following a revised monthly inflation rate of 0.3 percent in April. Economists had forecast a 0.1 percent increase.
At the same time, input prices edged down 0.1 percent on year in May, compared to a revised fall of 1.4 percent in April. Month-on-month, input prices were unchanged between April and May, after a revised monthly inflation rate of 0.8 percent in April, the ONS said.
The ONS said the annual inflation rates for both input and output PPI are at their highest levels since May 2023.
The sterling held steady against other major currencies in the Asian trading today.
In the European trading now, the pound rose to 5-day highs of 0.8430 against the euro and 1.2734 against the U.S. dollar, from early lows of 0.8456 and 1.2700, respectively. If the pound extends its uptrend, it is likely to find resistance around 0.83 against the euro and 1.28 against the greenback.
Against the Swiss franc and the yen, the pound edged up to 1.1263 and 200.86 from early lows of 1.1226 and 200.42, respectively. The pound may test resistance around 1.15 against the franc and 202.00 against the yen.
Looking ahead, Eurozone construction output for April is due to be released at 5:00 am ET in the European session.
In the New York session, U.S. NAHB housing market index for June and U.S. mortgage approvals data are slated for release.
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