Pound Extends Gain As U.K. Inflation Hits 4-year High
June 13 2017 - 12:40AM
RTTF2
The British pound strengthened against the other major
currencies in the early European session on Tuesday, after data
showed that U.K. inflation accelerated unexpectedly in May and
factory gate prices continued to increase.
Data from the Office for National Statistics showed that U.K.
inflation rose to 2.9 percent in May from 2.7 percent in April.
Economists had forecast the annual rate to remain unchanged at 2.7
percent. This was the highest inflation since 2013.
On a monthly basis, consumer prices gained 0.3 percent, slightly
faster than the 0.2 percent increase economists had forecast.
Another report from the ONS showed that output price inflation held
steady at 3.6 percent in May. The rate came in line with
expectations.
At the same time, input price inflation eased to 11.6 percent
from 15.6 percent, while economists forecast it to slow moderately
to 13.5 percent.
Month-on-month, output prices edged up 0.1 percent compared to a
0.4 percent increase in April. Meanwhile, input prices fell 1.3
percent, following a 0.3 percent drop.
Traders await the U.S. Federal Reserve's two-day policy meeting
that kicks off later today.
The Fed is widely expected to hike its fed funds rate by 25
basis points, but investors will parse the policy statement for any
fresh hints on the pace of further tightening.
The Bank of England and the Bank of Japan will announce their
monetary policy decisions on Thursday and Friday, respectively.
In the Asian trading today, the pound had risen against its
major rivals.
In the early European trading, the pound rose to 0.8815 against
the euro and 1.2299 against the Swiss franc, from early lows of
0.8852 and 1.2244, respectively. If the pound extends its uptrend,
it is likely to find resistance around 0.86 against the euro and
1.26 against the franc.
Against the U.S. dollar and the yen, the pound edged up to
1.2714 and 140.09 from early lows of 1.2642 and 138.95,
respectively. The pound may test resistance near 1.28 against the
greenback and 144.00 against the yen.
Looking ahead, at 6:00 am ET, European Central Bank board member
Sabine Lautenschlager is expected to participate in panel
"Regulation" at 2017 International Monetary Conference in London,
United Kingdom.
In the New York session, U.S. PPI for May and U.S. NFIB small
business index for May are set to be published.
At 10:20 am ET, Bank of England Director for Banknotes and Chief
Cashier Victoria Cleland will participate in the ATM & Cash
Innovation Europe 2017, in London.
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