Investing.com - The pound trimmed losses against the U.S. dollar on Tuesday, pulling away from two-month lows although demand for sterling remained under pressure after data showed that the annual rate of inflation in the U.K. slowed to the lowest level in more than a year in October.
GBP/USD pulled away from 1.5854, the pair's lowest since September 13, to hit 1.5934, still down 0.34%.
Cable was likely to find support at 1.5775, the low of September 13 and resistance at 1.5900.
The pound came under pressure after the Office for National Statistics said the annual rate of inflation in the U.K. slowed to 2.2% in October, the lowest since September 2012, from 2.7% the previous month. Economists had expected the inflation rate to slow to 2.5%.
The weak data prompted investors to trim back expectations that the Bank of England would raise interest rates sooner than the bank’s forward guidance from August indicated.
Inflation was 0.1% higher from a month earlier in October, below expectations for a 0.3% rise.
The core inflation rate, which excludes energy, food, alcohol and tobacco, slowed to 1.7% year-over-year, the lowest rate since September 2009, from 2.2% in September.
The retail price index rose 2.6% in October, below forecasts for a 3% increase, after rising 3.2% in September.
The data also showed that the house prices index climbed 3.8% last month, below expectations for a 4.1% gain.
Meanwhile, demand for the dollar remained supported after last week’s strong U.S. jobs report spurred speculation that the Federal Reserve may start winding down its USD85 billion-a-month asset purchase program before the end of the year.
Sterling was also lower against the euro with EUR/GBP climbing 0.61%, to hit 0.8436.
Also Tuesday, data showed that the annual rate of inflation in Germany, the euro zone’s largest economy, slowed to 1.2% in October, the lowest level in more than three years, from 1.4% in September.
The data added to concerns over growing deflationary pressures in the euro area that prompted the European Central Bank to cut rates to a record low 0.25% on Thursday.
GBP/USD pulled away from 1.5854, the pair's lowest since September 13, to hit 1.5934, still down 0.34%.
Cable was likely to find support at 1.5775, the low of September 13 and resistance at 1.5900.
The pound came under pressure after the Office for National Statistics said the annual rate of inflation in the U.K. slowed to 2.2% in October, the lowest since September 2012, from 2.7% the previous month. Economists had expected the inflation rate to slow to 2.5%.
The weak data prompted investors to trim back expectations that the Bank of England would raise interest rates sooner than the bank’s forward guidance from August indicated.
Inflation was 0.1% higher from a month earlier in October, below expectations for a 0.3% rise.
The core inflation rate, which excludes energy, food, alcohol and tobacco, slowed to 1.7% year-over-year, the lowest rate since September 2009, from 2.2% in September.
The retail price index rose 2.6% in October, below forecasts for a 3% increase, after rising 3.2% in September.
The data also showed that the house prices index climbed 3.8% last month, below expectations for a 4.1% gain.
Meanwhile, demand for the dollar remained supported after last week’s strong U.S. jobs report spurred speculation that the Federal Reserve may start winding down its USD85 billion-a-month asset purchase program before the end of the year.
Sterling was also lower against the euro with EUR/GBP climbing 0.61%, to hit 0.8436.
Also Tuesday, data showed that the annual rate of inflation in Germany, the euro zone’s largest economy, slowed to 1.2% in October, the lowest level in more than three years, from 1.4% in September.
The data added to concerns over growing deflationary pressures in the euro area that prompted the European Central Bank to cut rates to a record low 0.25% on Thursday.