Investing.com – The pound extended losses against the U.S. dollar on Tuesday, falling to hit a fresh 2-day low after U.K. consumer price inflation soared to a 4-month high in October, forcing the Bank of England to explain why CPI remained above target.
GBP/USD hit 1.5989 during European morning trade, the pair’s lowest since last Friday; the pair subsequently consolidated at 1.5991, shedding 0.37%.
Cable was likely to find support at 1.5826, the low of October 29 and resistance at 1.6153, Monday’s high.
Earlier in the day, the U.K. Office for National Statistics said that the rate of CPI was a seasonally adjusted 3.2% in October, up from 3.1% in September. Analysts had expected consumer price inflation to remain unchanged in October. Month-on-month, consumer prices rose 0.3%, following a flat reading in September.
The rate of inflation was more than a percentage point above the central bank's 2% target. The BOE Governor is obliged to write to the Chancellor of the Exchequer every three months that inflation is more than a percentage point above or below its target.
In his fourth explanatory letter to the government this year, BOE governor Mervyn King said that the rise in inflation was temporary and pointed to excess capacity in the economy that will bring it down.
The pound was also down against the euro, with EUR/GBP rising 0.31% to hit 0.8489.
Later in the day, the U.S. was to release official data on producer price inflation and industrial production, as well as a report on the capacity utilization rate.
GBP/USD hit 1.5989 during European morning trade, the pair’s lowest since last Friday; the pair subsequently consolidated at 1.5991, shedding 0.37%.
Cable was likely to find support at 1.5826, the low of October 29 and resistance at 1.6153, Monday’s high.
Earlier in the day, the U.K. Office for National Statistics said that the rate of CPI was a seasonally adjusted 3.2% in October, up from 3.1% in September. Analysts had expected consumer price inflation to remain unchanged in October. Month-on-month, consumer prices rose 0.3%, following a flat reading in September.
The rate of inflation was more than a percentage point above the central bank's 2% target. The BOE Governor is obliged to write to the Chancellor of the Exchequer every three months that inflation is more than a percentage point above or below its target.
In his fourth explanatory letter to the government this year, BOE governor Mervyn King said that the rise in inflation was temporary and pointed to excess capacity in the economy that will bring it down.
The pound was also down against the euro, with EUR/GBP rising 0.31% to hit 0.8489.
Later in the day, the U.S. was to release official data on producer price inflation and industrial production, as well as a report on the capacity utilization rate.