Pound Rises As U.K. Inflation Slows Less-than-expected
May 21 2024 - 11:24PM
RTTF2
The British pound strengthened against other major currencies in
the pre-European session on Wednesday, after data showed that U.K.
consumer price inflation slowed less than expected in April,
leaving a 50 percent chance of a June rate cut unchanged. Data from
the Office for National Statistics showed that the U.K. consumer
price inflation weakened to the lowest since July 2021. Consumer
prices rose 2.3 percent on a yearly basis in April, slower than the
3.2 percent increase in March. However, inflation was stronger than
economists' forecast of 2.1 percent.
The April inflation was the weakest since July 2021, when it was
2.0 percent.
Month-on-month, the consumer price index posted 0.3 percent
increase after rising 0.6 percent a month ago. Economists were
expecting a 0.2 percent gain.
Another report from the ONS showed that output price inflation
was the highest since May 2023. Output prices moved up 1.1 percent
after a 0.7 percent gain in March. Monthly inflation remained
unchanged at 0.2 percent.
Input prices declined for the eleventh consecutive month in
April. Input prices registered an annual fall of 1.6 percent
following a 2.5 percent drop in March. The monthly input PPI
inflation rate was 0.6 percent in April, following a revised 0.2
percent fall in March.
Also, the European shares traded higher, as investors await
highly anticipated earnings results from AI chip leader Nvidia, set
for release after the U.S. closing bell.
In economic releases, the minutes of the Fed's April 30-May 1
meeting as well as a report on U.S. existing home sales may garner
some attention.
The minutes may shed additional light on Fed officials' thinking
with regard to the outlook for rates.
The British sterling held steady against its major rivals in the
Asian trading today.
In the European trading now, the pound rose to nearly a
1-1/2-month high of 0.8512 against the euro and nearly a 2-year
high of 1.1645 against the Swiss franc, from yesterday's closing
quotes of 0.8543 and 1.1582, respectively. If the pound extends its
uptrend, it is likely to find resistance around 0.83 against the
euro and 1.17 against the franc.
Against the U.S. dollar and the yen, the pound advanced to a
2-month high of 1.2763 and nearly a 4-week high of 199.55 from
Tuesday's closing quotes of 1.2708 and 198.54, respectively. The
pound may test resistance around 1.29 against the greenback and
201.00 against the yen.
Looking ahead, U.S. MBA mortgage approvals data, U.S. existing
home sales data for April and U.S. EIA crude oil data are slated
for release in the New York session.
At 2:00 pm ET, the minutes of the U.S. Federal Reserve's latest
monetary policy meeting will be published.
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