Pound Rebounds On More-than-expected U.K. Inflation Data
April 17 2024 - 1:58AM
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The British pound rebounded from early lows against other major
currencies in the European session on Wednesday, after data showed
that the nation's Consumer Price Index for March grew more than
what economists had expected, making it likely to push back market
expectations of an early rate cut.
Data from the Office for National Statistics showed that U.K.
consumer price inflation softened to 3.2 percent in March from 3.4
percent in February. However, this was slightly above the forecast
of 3.1 percent.
The March inflation was the lowest since September 2021, when it
was 3.1 percent.
At the same time, core inflation that excludes energy, food,
alcohol and tobacco, eased to 4.2 percent from 4.5 percent in
February. The rate was seen at 4.1 percent.
On a monthly basis, the consumer price index moved up 0.6
percent, the same as in February.
Another data from the ONS showed that input prices fell 2.5
percent in the year to March, worse than a revised fall of 2.2
percent in the year to February.
Meanwhile, factory gate inflation rose to 0.6 percent from 0.4
percent in the previous month.
On a monthly basis, input prices fell 0.1 percent, but output
prices rose 0.2 percent in March.
European stocks traded higher after reports that the United
States and the European Union are planning to impose new sanctions
on Iran, following its weekend attack on Israel.
Israel has vowed to retaliate against Iran, but officials
haven't said how or when they might strike.
Israel's Foreign Minister Israel Katz said a diplomatic
offensive against Iran would be carried out alongside Israel's
military response.
Federal Reserve Chair Jerome Powell cautioned that persistently
elevated inflation will likely delay any rate cuts until later this
year.
The International Monetary Fund said on Tuesday that a resilient
global economy is set for steady growth in the next two years, but
the growth will be uneven amid persistent risks.
In the Asian session today, the sterling traded lower against
its major rivals.
In the European trading now, the pound rose to a 2-day high of
1.2481 against the U.S. dollar, from an early low of 1.2417. The
pound may test resistance near the 1.27 region.
Against the euro, the pound advanced to more than a 5-week high
of 0.8520 from an early 2-day low of 0.8554. The next possible
upside target for the pound is seen around 0.84 region.
The pound edged up to 192.82 against the yen and 1.1373 against
the Swiss franc, from early lows of 192.01 and 1.1332,
respectively. If the pound extends its uptrend, it is likely to
find resistance around 194.00 against the yen and 1.15 against the
franc.
Looking ahead, U.S. MBA mortgage approvals data, U.S. EIA crude
oil data and U.S. Fed Beige book report are slated for release in
the New York session.
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