Pound Sterling to US Dollar (GBP/USD) Exchange Rate Falls 0.4%
The Pound fell against peers like the US Dollar and Euro following the release of the UK’s inflation report, and the GBP/USD pairing extended declines after the US Consumer Price Index came in higher than anticipated.
Rather than holding at -0.1% on the year, the US non-core CPI rose to 0.0%. The core measure also increased, rising from 1.6% to 1.7% in February.
According to Reuters; ‘Signs of inflation are likely to be welcomed by Federal Reserve officials. They are also a good omen for an economy that has stumbled in recent months under the weight of a harsh winter, weak global demand, a strong dollar and the now-settled labor dispute at one of the country’s busiest ports. The Labour Department said on Tuesday its Consumer Price Index increased 0.2 percent last month after declining 0.7 percent in January. That ended three straight months of declines in the index.’
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.4886
Meanwhile, the Pound Sterling to Euro (GBP/EUR) exchange rate advanced back above 1.36 but remained 0.2% down on the day’s opening levels.
Earlier…
Both the Pound Sterling to US Dollar (GBP/USD) and Pound Sterling to Euro (GBP/EUR) exchange rates declined following the publication of the UK’s inflation figures for February.
Pound Sterling to US Dollar (GBP/USD) Exchange Rate Weaker, US CPI Ahead
The Pound Sterling to US Dollar (GBP/USD) exchange rate began the European session trading in a narrow range as the bets that the Federal Reserve might delay increasing interest rates kept the ‘Greenback’ under pressure.
However, the GBP/USD exchange rate recorded a modest initial decline following the release of the UK’s inflation report.
The Pound Sterling to US Dollar (GBP/USD) exchange rate hit a low of 1.4913
The UK’s non-core Consumer Price Index for February printed at 0.3% on the month following a negatively revised drop of -0.5% in January.
This resulted in an annual figure of 0%, less than the 0.1% reading expected.
The nation’s core inflation rate fell from 1.4% year-on-year to 1.2%, defying predictions for a reading of 1.3%.
According to economist Vicky Redwood; ‘Tuesday’s inflation figures are likely to show the UK taking another step further towards deflation. And the recent rise in the Pound will put additional downward pressure on inflation further ahead.’
The Pound Sterling to US Dollar (GBP/USD) exchange rate achieved a high of 1.4966
While the Pound remained trading close to the key technical support level of 1.50 against the US Dollar after the report was published, the British currency did record declines against a number of its most traded currency counterparts.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Demand Reduced by Eurozone PMI
The weakness in the Pound Sterling to Euro (GBP/EUR) exchange rate was exacerbated by the publication of largely positive Markit Purchasing Managers Indexes for the Eurozone and its largest economies.
Some of the data for France may have fallen wide of the mark, but the reports for Germany and the currency bloc as a whole impressed.
Markit economist Chris Williamson remarked; ‘The Eurozone’s economic recovery gained further momentum in March, with the PMI hitting its highest for almost four years. The improvement provides welcome news to a region awaiting signs that the ECB’s quantitative easing is stimulating the real economy.’
Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast: Soft US CPI Could See Pound Rebound
The Pound Sterling to US Dollar (GBP/USD) exchange rate could recover losses in the hours ahead if the US CPI shows the rate of inflation in the world’s largest economy printed at or below the -0.1% figure forecast by economists.
As weaker-than-anticipated inflationary levels could see the Federal Reserve rule out an interest rate increase in 2015 altogether, the report has the potential to inspire a rebound in the GBP/USD currency pair.
The direction taken by the Pound Sterling to US Dollar (GBP/USD) exchange rate may also be dictated by the US Markit Manufacturing PMI and domestic New Home Sales report.
Meanwhile, the Pound Sterling to Euro (GBP/EUR) exchange rate could record additional losses if it appears that Greece is moving closer to striking an agreement with its creditors.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.3620, the US Dollar to Euro (USD/EUR) exchange rate is currently trending in the region of 0.9119, the Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.0965, the Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.4935.
