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