The Pound Sterling was lower against its main rival, the common currency Euro following the release off a report which showed that inflation in the U.K. fell below the target set forth by the Bank of England. The last time the BoE missed the inflation target was in 2010, but the news effectively eased pressure for a rate hike. According to the report from the Office of National Statistics, on a year-over-year basis, the Consumer Price Index fell in January to 1.9% against expectations that it would remain at the targeted 2% level while core inflation, which nets out volatile components like energy and food, slipped to 1.6% from 1.7% against expectations of a rise to 1.9%.
As reported at 12:32 p.m. (JST) in Tokyo, the EUR/GBP was trading at 82.34 Pence, a gain of 0.4% and the largest single day’s gain in nearly two weeks; as recently as this past Monday the pair had struck a 1-year trough. The GBP/USD dipped to $1.6655, moving away from the 4-year peak struck on Monday; analysts say that disappointing economic data from the U.S. helped Sterling recover to $1.6713.
BoE Inflation Forecast Missed Mark
Last week, the BoE hinted in its recently issued inflation report that it might consider a tighter monetary policy in order to maintain the inflation target of 2%, but the slight drop has now eased those considerations. The BoE has not seen the need for tightening in more than five years.