The sterling pound today fell to new daily lows against the US dollar following the release of disappointing UK inflation data in the early London session. The GBP/USD currency pair’s decline was also fueled by dovish comments from a Bank of England policymaker increasing the likelihood of future rate cuts.
The GBP/USD currency pair today fell from a high of 1.3042 in the late Asian session to a low of 1.2985 after the inflation report but was on its way up at the time of writing.
The currency pair rallied higher in the Asian session driven by positive investor sentiment before falling in the London session. The release of the disappointing UK consumer price index report for December accelerated the pound’s decline. According to the Office for National Statistics, UK headline inflation remained flat in December missing analysts expectations of a 0.2% expansion. The annualised print came in at 1.3% versus the expected 1.5% figure; the core CPI print also missed consensus estimates. The UK’s producer price index also missed expectations, as did the retail price index.
Dovish comments by Michael Saunders an external member of the Bank of England’s Monetary Policy Committee also did not help the cable. Saunders is advocating for a rate cut as a risk management strategy to avoid low inflation levels. Boris Johnson appointed David Frost as the lead negotiator for the trade talks with the EU.
The currency pair’s future performance is likely to be affected by trade and Brexit headlines as well as the US PPI report.
The GBP/USD currency pair was trading at 1.3021 as at 11:15 GMT having recovered from a low of 1.2985. The GBP/JPY currency pair was trading at 143.02 having dropped from a high of 143.38.
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