An unexpected drop in the February inflation report sent the pound sterling to a 7-week trough against the greenback. The Office of National Statistics in the UK reported that the February reading for CPI fell to 0.4% last month on a year-on-year basis, down from 0.7% and below the 0.8% that had been predicted. Core inflation was also unexpectedly lower at 0.9% against what analysts thought would be a flat reading at 1.4%. Generally, across the board today, most data releases were worse than analysts had predicted with the Retail Price Index remaining flat at 1.4% against a predicted rise. The only bright spot was the PPI Core Output report which was better than anticipated at 0.1%, though showing a decline from the previous reading.
In London trading as of 10:07 am, the GBP/USD was trading lower at $1.372, down 0.02371%; the pair has ranged from a high of $1.37656 to a low of $1.36735 in today's trading day. The EUR/GBP was higher at 0.8619 pence, up 0.0406%, off the session peak of 0.86461 pence while the low was recorded at 0.86045 pence. The GBP/JPY was down at 149.1690 yen, a loss of 0.1553%.
EU PMI Reports Fail to Sustain Euro Rise
In other data in the Eurozone, preliminary PMI reports were released for March earlier today. From a quick glimpse at the data, there was widespread improvement in the manufacturing and services sectors, with a corresponding rise in the composite reports. Looking at the Eurozone's strongest economy, Germany, the preliminary reading for the manufacturing sector came in at 66.6 against a forecast of 60.8, while the services sector reading was at 50.8 against a predicted 46.2. France similarly saw a jump in the numbers, with 58.8, 47.8 and 49.5 in the manufacturing, services, and composite readings. Likewise, the EU figures, a reflection of the whole Eurozone's data, came in at 62.4, 48.8 and 52.5. The news helped to push the euro momentarily higher, with the EUR/USD now trading at $1.1827, down 0.211%, and off the earlier peak of $1.18559. The euro continues to be weighed by the economic repercussions of the COVID-19 virus and the poor rollout of vaccine distribution, as compared to the UK's efforts.