Investing.com - The pound was trading at session lows against the dollar and the euro on Tuesday after data showed that consumer price inflation in the U.K. fell below the Bank of England’s 2% target for the first time since November 2009 in January.
GBP/USD hit session lows of 1.6656 and was last down 0.27% to 1.6668.
Cable was likely to find support at 1.6591, last Thursday’s low and resistance at 1.6740, the session high.
The Office for National Statistics said consumer price inflation accelerated at a rate of 1.9% last month, down from 2.0% in December. Analysts had expected consumer price inflation to remain unchanged last month.
Consumer prices fell 0.6% in January from a month earlier, compared to expectations for a decline of 0.5%.
Core CPI, which excludes food, energy, alcohol, and tobacco costs rose 1.6% in January, slowing from 1.7% in December. Analysts had expected an increase to 1.9%.
The retail price index rose 2.8% last month, up from 2.7% in November, the ONS said.
The data also showed that the house price index climbed 5.5%, below expectations for a 5.8% gain, up from a 5.4% increase in December
The data reinforced the view that the Bank of England is unlikely to raise interest rates any time soon, despite the stronger economic outlook.
Elsewhere, the euro moved higher against sterling, with EUR/GBP climbing 0.46% to a one-week high 0.8237.
The common currency shrugged off a report showing that the closely watched ZEW index of German economic sentiment deteriorated unexpectedly in February, amid concerns over the outlook for the U.S. economic recovery and fears over turbulence in emerging markets.
The ZEW Centre for Economic Research said that its index of German economic sentiment came in at 55.7 this month, down from 61.7 in January. Analysts had expected an unchanged reading.
However, the current conditions index improved to two-and-a-half year highs of 50.0 this month from 41.2 in January, beating expectations for an increase to 44.0.
Meanwhile, the ZEW index of euro zone economic sentiment fell to 68.5 from 73.3 last month, compared to expectations for an uptick to 73.9.