News Column

Pound Slides After UK Inflation Data

August 19, 2014

BRUSSELS (Alliance News) - The British pound weakened against its key counterparts in the early European session on Tuesday as UK inflation slowed more than expected in July and factory gate prices declined unexpectedly.

Data from the Office for National Statistics showed that the inflation eased to 1.6% in July from 1.9% in June. Inflation was forecast to slow to 1.8%.

Month-on-month, consumer prices fell 0.3%, offsetting the 0.2% increase in June. Economists had expected a 0.2% drop for July.

Factory gate prices declined unexpectedly in July. Output prices slipped 0.1% annually, confounding expectations for a flat growth. In June, output prices gained 0.3%.

On a monthly basis, output prices dipped 0.1% each in July, June and May.

Input prices plunged 7.3% year-on-year in July, faster than the 4.5% decline in June. On a monthly basis, input prices were down 1.6% versus a 0.9% drop in June.

The pound fell to a 4-month low of 1.6633 against the US dollar, from an early high of 1.6727.

Against the yen, the pound fell to a 4-day low of 170.68 from an early high of 171.62.

Pulling away from an early 6-day high of 0.7981 against the euro, the pound slipped to a 4-day low of 0.8023.

The pound, which closed yesterday's deals at 1.5161 against the Swiss franc, edged down to 1.5089. This may be compared to an early 6-day high of 1.5174.

If the pound extends its downtrend, it is likely to find support around 0.803 against the euro, 1.65 against the greenback, 1.50 against the franc and 170.21 against the yen.

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Source: Alliance News

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