Investing.com - The pound fell to three week lows against the dollar on Tuesday after data showed that the annual rate of inflation in the U.K. fell to a four year low in November, easing pressure on the Bank of England to tighten monetary policy.
GBP/USD briefly touched session highs of 1.6336, but was last down 0.20% to 1.6266.
Cable was likely to find support at 1.6196, Friday’s low and resistance at 1.6360, Friday’s high.
The Office for National Statistics said the annual rate of consumer price inflation in the U.K. rose by 2.1% in November, slowing from 2.2% the previous month. It was the smallest increase since November 2009. Economists had expected 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.
Market sentiment remained subdued ahead of the outcome of the Federal Reserve’s two-day policy meeting on Wednesday, amid ongoing uncertainty over when the bank will announce a reduction in the pace of its USD85 billion-a-month asset purchase program.
Markets were turning their attention to U.S. inflation data due out later in the session amid concerns that the subdued inflation outlook could prompt the Fed to keep its stimulus program in place for longer.
Elsewhere, sterling was lower against the euro, with EUR/GBP rising 0.15% to 0.8456.
In the euro zone, a report on Tuesday showed that the ZEW index of German economic sentiment rose to 62.0 in December from November’s reading of 54.6. It was the highest level since April 2006. Economists had expected the index to tick up to 55.0 this month.
GBP/USD briefly touched session highs of 1.6336, but was last down 0.20% to 1.6266.
Cable was likely to find support at 1.6196, Friday’s low and resistance at 1.6360, Friday’s high.
The Office for National Statistics said the annual rate of consumer price inflation in the U.K. rose by 2.1% in November, slowing from 2.2% the previous month. It was the smallest increase since November 2009. Economists had expected 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.
Market sentiment remained subdued ahead of the outcome of the Federal Reserve’s two-day policy meeting on Wednesday, amid ongoing uncertainty over when the bank will announce a reduction in the pace of its USD85 billion-a-month asset purchase program.
Markets were turning their attention to U.S. inflation data due out later in the session amid concerns that the subdued inflation outlook could prompt the Fed to keep its stimulus program in place for longer.
Elsewhere, sterling was lower against the euro, with EUR/GBP rising 0.15% to 0.8456.
In the euro zone, a report on Tuesday showed that the ZEW index of German economic sentiment rose to 62.0 in December from November’s reading of 54.6. It was the highest level since April 2006. Economists had expected the index to tick up to 55.0 this month.