Pound Loses Momentum Following Weak Inflation Data

While investors are waiting for the final inflation data from the eurozone in hope that the price growth accelerated, the UK delivers the inflation report, indicating the expected slowdown. The National Office for Statistics reported that the consumer price index decreased to 3% in December in annual terms, which came in line with market expectations. Last month, the inflation reached nearly 6-year high. However, some economists anticipate that the inflation rate will decelerate to 2% in the coming years. The core inflation excluding food and energy prices also declined to 2.5% on a yearly basis while analysts expected the core prices to rise by 2.6%. The weak inflation data should have triggered a fall in the pound sterling.

The inflation deceleration put the pound sterling under pressure. Besides, actions of the Bank of England arouse concerns as many experts fear that the regulator lost control of the situation. Furthermore, the US dollar is in oversold conditions, which is also a negative factor. Therefore, the British currency is expected to slide to the level of 1.3725.

By the way, the GBP/USD pair is trading near the levels that had been seen before traders learnt the results of the Brexit referendum. The British currency gained ground on the back of the weaker US dollar. Besides, the news about the plans of Spain and the Netherlands to maintain trade relations with the United Kingdom also provides support to the pound. Gradually, the strong impact that Brexit has upon the pound sterling will likely fade away. Besides, buyers may want to fix their profits in the near future. So, analysts expect a correction.

Feed enhanced by Better Feed from Ozh

Trade Forex, Commodities, Stocks and more, trade CFDs on the Plus 500 CFD trading platform! *CFD Service. 80.6% lose money - Register a real money account here and get trading right away.

Disclaimer: Please note all prices are for information only, they should not be relied upon for accuracy or trading. All prices quotes are based on CFD prices and are similar though not always identical to real exchange prices. STOCKTRKR or anybody connected with STOCKTRKR will not accept any liability for loss or damage arising from use of any information/commentary/charts or articles which is provided 'as is' for educational purposes only, nothing contained on this website should be considered as investment advice - please seek proper investment advice from registered financial broker or institution if you wish to trade on global markets and ensure you are familiar with the risks.