The pound fell to near four-week lows on Tuesday following weaker-than-expected inflation data out of the United Kingdom which raised questions as to whether interest rates would be hiked in the near term. The sterling’s slide continued into Wednesday, with the currency trading down 0.17 percent to $1.3141. The sterling was also lower against the euro, trading at 0.8968 as of 1:57 p.m. HK/SIN.
The numbers released on Tuesday showed that UK consumer price inflation was steady at an annual rate of 3.0 percent in October. Economists had predicted the inflation rate to be at 3.1 percent. Earlier this month, when the Bank of England raised interest rates for the first time in ten years, it predicted that inflation would be at 3.2 percent in October before heading back to the 2 percent target.
The unexpected announcement sent the sterling broadly lower, though it ended up 0.1 percent for the day on Tuesday due to the dollar’s weakening. The pound is also under pressure as British Prime Minister Theresa May faces an uncertain future after a report that 40 of her Conservative parliament members would sign a no-confidence letter against her.
Solid Economic Outlook for Japan Buoys Yen
Japan’s gross domestic product grew by 0.3 percent in Q3 compared to Q2, reports out Wednesday showed, confirming the country’s economic growth for seen consecutive quarters, the longest period of growth since 1999. The country’s economy grew at a 1.4 percent annualized rate in Q3 beating estimates of 1.3 percent, largely due to strong exports.
The yen was broadly higher on Wednesday, trading at 113.21 against the dollar and 133.42 against the euro. The Australian dollar also eased 0.87 percent against the yen, to trade at 85.80.