Investing.com - The pound softened against the dollar on Tuesday after data revealed U.K. inflation rates hit a four-year low, though uncertainty over the fate of U.S. monetary policy capped the greenback's advance.
In U.S. trading on Tuesday, GBP/USD was trading at 1.6269, down 0.19%, up from a session low of 1.6220 and off from a high of 1.6336.
Cable was likely to find support at 1.6134, the low from Nov. 25, and resistance at 1.6349, Monday's high.
The Office for National Statistics reported earlier that the U.K.'s annual rate of consumer price inflation rose by 2.1% in November, down from 2.2% the previous month and also the smallest increase since November of 2009. Economists were expecting an unchanged reading.
Consumer prices rose 0.1% in November from a month earlier, below expectations for a 0.2% increase.
Core CPI rose by 1.8% last month, in line with expectations, accelerating from 1.7% in October.
The retail price index rose 2.6% in November, unchanged from October and below forecasts for a 2.7% increase.
The data also showed that the house prices index climbed 5.5% in the twelve months to October, above expectations for a 4.2% gain. It was the fastest increase since September 2010.
Meanwhile in the U.S., the Department of Labor reported that the U.S. consumer price index came in flat in November after falling 0.1% in October. Analysts were calling for a 0.1% uptick.
The annual rate of inflation rose 1.2% in November, just shy of expectations for 1.3% reading but still up from a four-year low of 1.0% in October.
U.S. core inflation, stripped of volatile food and energy items, rose 0.2% in November from October, beating expectations for a 0.1% gain, while the year-on-year rate for November rose 1.7%, which met consensus forecasts.
The Federal Reserve views core prices as a better gauge of longer-term inflationary pressure because they exclude the volatile food and energy categories. Monetary authorities usually try to aim for 2% core inflation or less.
Markets took the data in stride, keeping an eye towards Wednesday, when the Fed will release its statement on interest rates and monetary policy.
Investors were eager for the U.S. central bank to announce plans to either let stand or trim the size of its USD85 billion in monthly bond purchases, a monetary stimulus policy known as quantitative easing that weakens the dollar by driving down interest rates to spur recovery.
The pound, meanwhile, was down against the euro and down against the yen, with EUR/GBP up 0.24% at 0.8464 and GBP/JPY down 0.58% at 166.95.
On Wednesday, the pair will move on the Fed's statement on U.S. monetary policy. Elsewhere, the U.S. is to release data on building permits and housing starts.
Also on Wednesday, the Bank of England is to publish the minutes of its most recent policy meeting. The U.K. is also to release data on the change in the number of people employed and the unemployment rate.
In U.S. trading on Tuesday, GBP/USD was trading at 1.6269, down 0.19%, up from a session low of 1.6220 and off from a high of 1.6336.
Cable was likely to find support at 1.6134, the low from Nov. 25, and resistance at 1.6349, Monday's high.
The Office for National Statistics reported earlier that the U.K.'s annual rate of consumer price inflation rose by 2.1% in November, down from 2.2% the previous month and also the smallest increase since November of 2009. Economists were expecting an unchanged reading.
Consumer prices rose 0.1% in November from a month earlier, below expectations for a 0.2% increase.
Core CPI rose by 1.8% last month, in line with expectations, accelerating from 1.7% in October.
The retail price index rose 2.6% in November, unchanged from October and below forecasts for a 2.7% increase.
The data also showed that the house prices index climbed 5.5% in the twelve months to October, above expectations for a 4.2% gain. It was the fastest increase since September 2010.
Meanwhile in the U.S., the Department of Labor reported that the U.S. consumer price index came in flat in November after falling 0.1% in October. Analysts were calling for a 0.1% uptick.
The annual rate of inflation rose 1.2% in November, just shy of expectations for 1.3% reading but still up from a four-year low of 1.0% in October.
U.S. core inflation, stripped of volatile food and energy items, rose 0.2% in November from October, beating expectations for a 0.1% gain, while the year-on-year rate for November rose 1.7%, which met consensus forecasts.
The Federal Reserve views core prices as a better gauge of longer-term inflationary pressure because they exclude the volatile food and energy categories. Monetary authorities usually try to aim for 2% core inflation or less.
Markets took the data in stride, keeping an eye towards Wednesday, when the Fed will release its statement on interest rates and monetary policy.
Investors were eager for the U.S. central bank to announce plans to either let stand or trim the size of its USD85 billion in monthly bond purchases, a monetary stimulus policy known as quantitative easing that weakens the dollar by driving down interest rates to spur recovery.
The pound, meanwhile, was down against the euro and down against the yen, with EUR/GBP up 0.24% at 0.8464 and GBP/JPY down 0.58% at 166.95.
On Wednesday, the pair will move on the Fed's statement on U.S. monetary policy. Elsewhere, the U.S. is to release data on building permits and housing starts.
Also on Wednesday, the Bank of England is to publish the minutes of its most recent policy meeting. The U.K. is also to release data on the change in the number of people employed and the unemployment rate.