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Forex - GBP/USD drops to 4-1/2 month lows on U.K. inflation data

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Investing.com -

Investing.com - The pound dropped to four-and-a-half month lows against the U.S. dollar on Tuesday, as the release of disappointing U.K. inflation data overshadowed recent comments by Bank of England Governor Mark Carney.

GBP/USD hit 1.6635 during European morning trade, the pair's lowest since April 8; the pair subsequently consolidated at 1.6654, retreating 0.44%.

Cable was likely to find support at 1.6607, the low of April 8 and resistance at 1.6738, Monday's high.

The U.K. Office for National Statistics said the rate of consumer price inflation slowed to 1.6% last month from 1.9% in June and compared to expectations for a reading of 1.8%.

Month-over-month, consumer price inflation declined 0.3% in July, compared to estimates for a 0.2% decline.

Core CPI, which excludes food, energy, alcohol, and tobacco costs rose by 1.8% last month, down from 2% in June. Analysts had expected core prices to rise 1.9% in July.

The data also showed that the house prices index climbed 10.2% in June, compared to forecasts for a reading of 11.5% and following a 10.5% increase in May.

The pound had strengthened broadly on Monday after BoE Governor Carney said over the weekend that interest rates could rise before wage growth picks up.

Investors were looking ahead to Wednesday's minutes of the BoE's August policy meeting for signs that the bank is moving closer to hiking borrowing costs.

Meanwhile, the greenback remained supported after a report on Monday showed that U.S. home builder sentiment rose unexpectedly in August, signalling underlying strength in the housing market.

Sterling was lower against the euro, with EUR/GBP rising 0.33% to 0.8015.

Later in the day, the U.S. was to release reports on building permits, housing starts and consumer inflation.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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