Join our community of traders FOR FREE!

  • Learn
  • Improve yourself
  • Get Rewards
Learn More

The British pound hovered near the weakest level in almost six weeks against the US dollar, after a report showed inflation in the UK rose at the slowest annual rate since October 2009 last month.

GBP/USD touched a daily low at 1.6482 at 07:45 GMT, after which it consolidated to trade little changed at 1.6499 at 10:31 GMT, adding 0.01% for the day. Support was likely to be found at March 24th low, 1.6466, also the pairs weakest since February 12th, while resistance was to be met at March 24th high, 1.6536.

UK consumer prices rose by 1.7% last month from a year earlier, the lowest since October 2009, in line with analysts estimates. Inflation, which stood at 1.9% in January, has slowed from 5.2% in September 2011.

On a monthly basis, consumer prices rose 0.5% in February, in line with analysts projections and following a 0.6% drop in the previous month.

Sterling’s demand continued to be pressured after the minutes of Bank of England’s March meeting on policy revealed last week that policy makers voted unanimously to keep their benchmark interest rate at a record-low 0.5%. On March 19th, after BoE’s minutes were released, the pound fell to a three-month low.

Meanwhile, a report by the US Commerce Department may show today that sales of new homes in the US dropped 4.9% in February, reaching an annualized 445 000 pace, according to the median estimate of experts. A separate report by the US Federal Housing Finance Agency may reveal its house price index rose 0.6% in January, following a 0.8% increase in the prior month. Higher-than-expected readings will certainly heighten the greenback’s appeal.

Demand for the US dollar remained supported after Federal Reserve policy makers trimmed their bond-buying program by another $10 billion to $55 billion per month, last week. Moreover, Federal Reserve Chair Janet Yellen, said that the first increase in borrowing costs should come “around six months” after the end of the stimulus program. The monetary easing program, which tends to devalue the US dollar, is expected to be brought to an end this fall.

The Federal Open Market Committee also revised its forecasts, showing more policy makers predicted the main interest rate, now close to zero, would increase at least to 1% by the end of next year and 2.25% by the end of 2016, higher than previously forecast. The Committee also dropped the unemployment rate threshold for considering when to raise interest rates, making a transition to a wider set of data.

“The biggest focus is whether the U.S. economy will improve to justify the Fed’s outlook,” Shinichiro Kadota, a foreign-exchange strategist at Barclays Plc in Tokyo, cited by Bloomberg. “We expect U.S. data to strengthen and the dollar to rise gradually, especially around the second half of this year.”

Elsewhere, EUR/USD touched a session low at 1.3808 at 09:40 GMT, after which consolidation followed at 1.3812, losing 0.2% for the day. Support was likely to be found at March 24th low, 1.3760, while resistance was to be met at March 24th high, 1.3876.

TradingPedia.com is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover Forex, Price Action and Social Trading.

Related News

  • Japan’s unemployment rate at 2.6% for fourth monthJapan’s unemployment rate at 2.6% for fourth month The unemployment rate in Japan was reported at 2.6% in May, while remaining stable for the fourth consecutive month and also in line with market consensus.It has been the highest jobless rate since September 2023, data by the Ministry […]
  • Exxon share price down, tops expectations despite lower oil prices Exxon Mobil Corp announced on Monday it suffered a 21% reduction in quarterly profits, less than projected, as performance of the worlds biggest oil company was boosted by tax benefits and a compensation from Venezuela.Post-tax earnings […]
  • Forex Market: EUR/USD daily trading outlookForex Market: EUR/USD daily trading outlook Yesterday’s trade saw EUR/USD within the range of 1.0556-1.0596. The pair closed at 1.0570, shedding 0.12% on a daily basis, while marking its fourth consecutive trading day of losses. The daily low has been the lowest level since April 14th, […]
  • Forex Market: CAD/JPY forecast for MondayForex Market: CAD/JPY forecast for Monday During Friday’s trading session CAD/JPY traded within the range of 92.86-93.17 and closed at 92.94.Fundamental viewAt 23:50 GMT on April 20th Japans Ministry of Finance will report on countrys trade balance in March. In February the […]
  • Crude oil trading outlook: futures decline on ample supplies, Saudi hype passesCrude oil trading outlook: futures decline on ample supplies, Saudi hype passes Both West Texas Intermediate and Brent benchmark crudes fell on Friday after investors took profits following strong overnight gains and as the market shrug off a Saudi supply cut, having realized the reduction does not reflect a change in the […]
  • AUD/USD distances from 3 1/2-year lowsAUD/USD distances from 3 1/2-year lows Australian dollar distanced from lows unseen in 3.5 years against its US rival on Monday, following the large-scaled sell-off in emerging market shares and currencies on Friday.AUD/USD touched a daily high at 0.8737 at 7:10 GMT, after […]