TheÂ British pound today dropped significantly against theÂ US dollar following theÂ release ofÂ disappointing UK Consumer Price Index data inÂ theÂ early European session. TheÂ pound’s decline started during yesterday session after theÂ release ofÂ weak UK wages report andÂ upbeat US housing report, which made theÂ pound drop from its post-Brexit highs.
TheÂ GBP/USD currency pair lost over 140 points toÂ drop from aÂ high ofÂ 1.4315 to aÂ low ofÂ 1.4173 earlier today.
TheÂ currency pair’s massive decline was triggered byÂ theÂ release ofÂ theÂ weak UK CPI data byÂ theÂ Office forÂ National Statistics. TheÂ CPI print forÂ March came inÂ atÂ anÂ annualized 2.5%, which was lower than theÂ market expectation ofÂ 2.7%. TheÂ core CPI gauge also came inÂ below expectations inÂ March asÂ it was recorded atÂ anÂ annualized 2.3% versus theÂ consensus estimate ofÂ 2.5%. TheÂ UK retail price index also came inÂ below expectations atÂ aÂ monthly 0.1% versus theÂ expected 0.3%. TheÂ producer price index also contracted byÂ 0.1% inÂ March asÂ compared toÂ theÂ expected 0.3% expansion.
TheÂ pair’s decline could also be attributed toÂ profit-taking by traders given theÂ recent post-Brexit highs hit byÂ theÂ Cable. The drop could also be attributed toÂ subsiding investor optimism even asÂ markets seem toÂ have already priced-in aÂ May rate hike byÂ theÂ Bank ofÂ England asÂ well asÂ aÂ smooth Brexit transition.
TheÂ currency pair’s future performance is likely toÂ be influenced byÂ tomorrow’s UK retail sales data andÂ theÂ US jobless claims data.
TheÂ GBP/USD currency pair was trading atÂ 1.4223 asÂ atÂ 12:09 GMT having dropped from aÂ high ofÂ 1.4315. TheÂ GBP/JPY currency pair was trading atÂ 152.50 having declined from aÂ high ofÂ 153.63.
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