Forex - GBP/USD falls on safe-haven dollar demand, U.K. inflation data

A A A - The pound slid against the greenback on Tuesday after U.K. inflation data missed expectations.

The dollar, meanwhile, saw safe-haven demand ahead of Federal Reserve Chairman Ben Bernanke's Wednesday testimony in the U.S. Congress.

In U.S. trading on Tuesday, GBP/USD was trading at 1.5152, down 0.69%, up from a session low of 1.5112 and off from a high of 1.5276.

The pair was likely to find support at 1.5034, the low from April 4, and resistance at 1.5281, Monday's high.

In the U.K. earlier, the Office for National Statistics said the country's consumer price index slowed to an annual rate of 2.4% in April from 2.8% the previous month, missing expectations for a reading of 2.6%.

Month-over-month, consumer price inflation rose 0.2% in April, below expectations for a 0.4% increase, after rising 0.3% in March.

Core CPI, which excludes volatile food and energy costs, came in at 2.0% from 2.4% in March.

Analysts were expecting a 2.3% reading for core inflation prices.

Softer-than-expected inflation rates sparked talk that incoming Bank of England Governor Mark Carney has more room to loosen policy to spur more economic recovery if need be.

Meanwhile the dollar moved higher amid a flight to safety ahead of Fed Chairman Ben Bernanke's Wednesday testimony before Congress.

Stimulus measures currently in place, such as the Fed's monthly USD85 billion bond-buying program, weaken the greenback by flooding the economy full of liquidity to keep interest rates low and encourage investing and hiring.

Federal Reserve officials have suggested in public recently that the U.S. central bank may begin to scale back stimulus tools this summer, though some backtracked on such comments, causing uncertainty in markets that made the dollar more attractive due to its safe-haven appeal.

The pound, meanwhile, was down against the euro and down against the yen, with EUR/GBP trading up 0.89% at 0.8520 and GBP/JPY down 0.43% at 155.32.

All eyes will focus on Ben Bernanke Wednesday.

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This article appears in: Investing , Forex and Currencies

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