Investing.com - The pound dropped against the U.S. dollar on Tuesday, after the release of disappointing U.K. inflation data and as a terrorist attack in Brussels dampened risk sentiment.
GBP/USD hit 1.4254 during European morning trade, the pair’s lowest since March 17; the pair subsequently consolidated at 1.4283, declining 0.60%.
Cable was likely to find support at 1.4219, the low of March 17 and resistance at 1.4480, Monday’s high.
The U.K. Office for National Statistics said the rate of consumer price inflation rose by 0.3% last month, below forecasts for an increase of 0.4% and unchanged from 0.3% in January.
Month-over-month, consumer prices edged up 0.2% in February, below forecasts for an advance of 0.4% and following a decline of 0.8% in the prior month.
Bank of England Governor Mark Carney will now have to write an open letter to the Chancellor of the Exchequer, George Osborne, as inflation is more than a percentage point below the central bank's target of 2.0%.
Core CPI, which excludes food, energy, alcohol, and tobacco costs rose by 1.2% last month, in line with forecasts and unchanged from January.
A separate report showed that public sector net borrowing in the U.K. rose by £6.49 billion in February, disappointing expectations for an increase of £5.25 billion.
Public sector net borrowing declined by £14.41 billion in January, whose figure was revised from a previously estimated £11.81 billion.
Meanwhile, market sentiment weakened after explosions tore through the departure hall of Brussels airport on Tuesday morning killing up to 10 people and injuring 30 others and a second blast struck a metro station in the capital shortly afterwards, the Belgian public broadcaster RTBF said.
Sterling was lower against the euro, with EUR/GBP rising 0.26% to 0.7844.