Forex – GBP/USD edges lower after U.K. inflation report

Investing.com – The pound edged lower against the U.S. dollar on Tuesday, after data showed that consumer price inflation in the U.K. slowed to a record-low in January, although sentiment on the greenback remained vulnerable after a recent string of downbeat U.S. economic reports.
GBP/USD hit 1.5337 during European morning trade, the session low; the pair subsequently consolidated at 1.5349, slipping 0.10%.
Cable was likely to 1.5206, the low of February 12 and resistance at 1.5444, Monday’s high.
In a report, the U.K. Office for National Statistics said the rate of consumer price inflation decelerated to 0.3% last month from 0.5% in December, broadly in line with market expectations.
Month-over-month, consumer price inflation declined 0.9% in January, compared to expectations for a drop of 0.8% and after holding flat in December.
Bank of England Governor Mark Carney will now have to write an open letter to the Chancellor of the Exchequer, George Osborn, as inflation is more than a percentage point below the central bank’s target of 2.0%.
Core CPI, which excludes food, energy, alcohol, and tobacco costs rose at a rate of 1.4% last month, up from 1.3% in December and above forecasts for a reading of 1.3%.
The report also showed that the house prices index climbed 9.8% in December, below forecasts for a gain of 11.1% and down from 10.0% in November.
Meanwhile, the dollar remained under pressure after data last Friday showed that the preliminary reading of the University of Michigan’s consumer sentiment index fell to 93.6, down from January’s final reading of 98.1. Economists had forecast an unchanged figure.
The report came a day after data showing that U.S. retail sales unexpectedly fell 0.8% last month after dropping 0.9% in December, indicating that consumer spending remained sluggish at the start of the year.
Sterling was also lower against the euro, with EUR/GBP gaining 0.41% to 0.7420.
Later in the day, the U.S. was to release data on manufacturing activity in New York State as well as a private sector survey of home builders.