Pound Mixed Against Majors; UK Feb. Inflation Slows

Pound Mixed Against Majors; UK Feb. Inflation Slows




The pound showed mixed performance in early deals on Tuesday after a report showed that the inflation in the United Kingdom slowed for a fifth consecutive month in February to reach the lowest in fifteen months.
While the sterling held steady against the US dollar, it remained firmer against the rest of majors.
The latest figures from the Office for National Statistics revealed that the annual consumer price inflation eased to 3.4 percent in February from 3.6 percent in January. This was the lowest rate since November 2010.
Nevertheless, the inflation figure remained slightly above the 3.3 percent forecast by economists. It was also clearly above the central bank's 2 percent target.
Month-on-month, consumer prices rose 0.6 percent, reversing January's 0.5 percent fall. Economists had forecast 0.4 percent increase.
Core consumer price index, that excludes energy, food, alcoholic beverages and tobacco, rose 2.4 percent year-on-year in February, decelerating from 2.6 percent rise in January. Economists expected a slowdown of 2.3 percent. Month-on-month, the core CPI rose 0.8 percent.
Annual retail price inflation came in at 3.7 percent during the month, below 3.9 percent in January. This was forecast to fall to 3.5 percent.
European shares are trading lower on Chinese growth concerns and caution ahead of Federal Reserve chairman Ben Bernanke's speech tonight.
Thus far, the U.K. FTSE 100 index slipped 1.15 percent, France's CAC-40 index fell to 1.35 percent and Germany's DAX dropped 1.45 percent.
The pound was unable to take any clear positions against the dollar, with the cable holding its recent ranges around 1.5883 and 1.5853.
Against the yen, the pound reached above its psychologically important level of 133.0 for the first time since June 2011 but pared a few pips to reach below the 132.65 level around 7:15 am ET.
The pound paused its recent rally versus the Swiss franc and the euro, hovering around the 1.45 and 0.8320, respectively around 7:10 am ET.
Germany's producer price inflation eased for the fifth month to a 20-month low in February, data from the Federal Statistical Office showed today.
The producer price index increased 3.2 percent annually in February in line with economists' expectations, slower than the 3.4 percent rise in January.
Month-on-month, producer prices edged up 0.4 percent in February, after rising 0.6 percent in January. Economists were looking for a 0.5 percent gain on a monthly basis in February.
Meanwhile, production in the Swiss industrial sector decreased from last year in the fourth quarter, data released by the Federal Statistical Office showed today.
Industrial output decreased 1.4 percent year-on-year in the fourth quarter, after a revised 1.9 percent decline in the third quarter. Economists expected output to drop 2 percent.
Looking ahead, the U.S. housing starts and building permits report for February is due out in the New York morning session.


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