The Pound Sterling had earlier edged higher against the US Dollar in reaction to unexpectedly improved inflation data which had helped to boost sentiment. The Office of National Statistics reported that annualized CPI for January was at 1.8%, closing in on the Bank of England's target of 2%. The latest poll of economists has called for a rise to 1.6% from the previous 1.3%. Core CPI, which eliminates volatile components, also was better at 1.6% compared to January's 1.4% and an estimate hike of 1.5%. Producer prices for the month also showed a marked improvement, hitting 2.1% on an annualized basis, significantly better than the fall to -0.1% that had been predicted; the previous reading was also revised upward to 0.9% from -0.1%. Retail prices were also better at 2.7% against an expected 2.6%.
In London trading as of 11:05 am, the GBP/USD was trading at $1.2983, down 0.1077% and slipping from the session peak of $1.30242. The EUR/GBP was higher at 0.8319 Pence, a gain of 0.2084%; the pair has ranged from a trough of 0.82939 Pence to a high of 0.83297 Pence. The GBP/JPY was trading at 143.217 Yen, a gain of 0.2962%.
BoE Rate Outlook Shifts
The data helped to solidify investor sentiment regarding the Bank of England's monetary policy. According to the data, money markets are no longer expecting a BoE rate cut later this year, given the latest data and the recent comments from the UK's new finance minister. On Tuesday, Rishi Sunak had said that he anticipated the UK's budget would be presented as scheduled, on March 11th. The finance minister has also said he would do whatever he could from a fiscal standpoint to strengthen the economy which had faltered in the wake of Brexit uncertainty.