Forex - GBP/USD slides to 6-month low on soft U.K. inflation data

A A A - The pound fell to a 6-month low against the dollar earlier Tuesday after U.K. inflation data came in weaker than expected.

In U.S. trading on Tuesday, GBP/USD was trading at 1.5652, down 0.04%, up from a session low of 1.5573 and off from a high of 1.5670.

The pair was likely to find support at 1.5547, the low from Aug. 6, and resistance at 1.5810, Monday's high.

In a report, the Office for National Statistics revealed that the U.K.'s year-on-year consumer price index rose 2.7% in January, unchanged from December.

Analysts had expected consumer prices to rise 2.8% in January.

Month-over-month, January's CPI fell 0.5% compared to expectations for a 0.4% decline and after rising 0.5% in December.

The rate of inflation remains above the Bank of England's 2.0% target, but the Bank of England will not be obliged to write to the Chancellor of the Exchequer, as the inflation rate is less than a percentage point above or below its target.

Core CPI, which excludes volatile food, energy, alcohol, and tobacco prices, jumped 2.3% year-on-year in January from 2.4% in December.

Analysts had expected core prices to hold steady at 2.4%.

The retail price index rose 3.3% last month, compared to expectations for a 3.2% increase, after rising 3.1% December.

Softer-than-expected pricing data sent the pound slumping against the greenback, which had fallen against other currencies.

The pound, meanwhile, was down against the euro and down against the yen, with EUR/GBP trading up 0.36% at 0.8591 and GBP/JPY down 0.89% at 146.40.

In the U.K., the Bank of England will release its quarterly inflation report, which includes forecast for inflation over the following two years. The release is to be followed by a press conference with Bank of England Governor Mervyn King.

Later in the day, the U.S. is to publish official data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity. The U.S. is also to publish data on import prices, business inventories and crude oil stockpiles. - offers an extensive set of professional tools for the Forex, Commodities, Futures and the Stock Market including real-time data streaming, a comprehensive economic calendar, as well as financial news and technical & fundamental analysis by in-house experts.
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This article appears in: Investing , Forex and Currencies

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