British pound advanced against the US dollar on consumer inflation data

British pound jumped off session low against the US dollar on Tuesday, after official report stated, that consumer price index in the United Kingdom rose more than expected during May.

GBP/USD pair jumped off session low at 1.5657, lowest value since last Friday, reaching 1.5688 at 9:01 GMT. Support was expected at June 13th low, 1.5643, while resistance was likely to be encountered at June 13th high, 1.5736.

The Office for National Statistics in the United Kingdom reported that Consumer Prices Index (CPI) accelerated in May more than expected, due to record high costs for air fares, which contributed to the rise of the index above the targeted 2%, a level which ensures price stability. Consumer inflation rose to 2.7% in May on annual basis, compared to 2.4% in April. Estimates of a rise to 2.6% were exceeded. In monthly terms, consumer prices rose by 0.2% in May, slightly above expectations of a 0.1% increase, and matching the increase rate during April. At the same time British consumers faced a slow down in remuneration increase, which was by 0.9%, according to recent data, three times lower than the registered increase in inflation. Transportation was another sector, that favored consumer inflation results in May, as aircraft fuel and motor vehicles fuel became more expensive on annual basis. Air fares jumped by a record 22% in May, compared to April, alongside the higher prices of shoes and clothing. Core Consumer Price Index (CPI), which excludes energy, food and tobacco costs, rose by 2.2% in May on annual basis, up from 2% in April.

Additionally, UK Input Producer Price Index (PPI) recorded an unexpected drop by 0.3% in May on a monthly basis, as this was the third consecutive month of decrease. Expectations pointed no change in this indicator. In April input producer prices were 2.3% lower.

Meanwhile, investors were focusing on Wednesday’s highly anticipated FED meeting for clues on monetary policy, after last month FED Chairman Ben Bernanke said that the bank could begin tapering asset purchases at some of the future meetings, if economic conditions were sufficiently good.

Pound was lower against the euro, with EUR/GBP pair increasing by 0.34% to 0.8531.