Pound Falls On Soft U.K. CPI Data

(RTTNews) - The British pound weakened against other major currencies in the European session on Wednesday, after U.K. inflation slowed more than expected in November.

Data from the Office for National Statistics showed that the consumer price index rose 3.2 percent year-on-year, slower than the 3.6 percent increase in October. Inflation was forecast to ease marginally to 3.5 percent.

On a monthly basis, the CPI dropped 0.2 percent, in contrast to the 0.4 percent rise posted in October. Prices were expected to remain flat in November.

Core inflation that excludes prices of energy, food, alcohol and tobacco, softened to 3.2 percent from 3.4 percent in the previous month.

The annual increase in the CPI goods fell to 2.1 percent from 2.6 percent. Meanwhile, services inflation slowed only slightly to 4.4 percent from 4.5 percent.

Another report from the ONS showed that input price inflation accelerated in November while output price growth softened.

Input prices rose 1.1 percent year-on-year in November, up from a revised rise of 0.8 percent in October. At the same time, output price growth slowed to 3.4 percent from 3.6 percent.

On a monthly basis, input prices logged an increase of 0.3 percent after remaining flat. At the same time, output prices posted a steady growth of 0.1 percent.

Markets expect a Bank of England (BoE) rate drop this week due to weakening UK GDP, declining inflation, and improving labor market conditions.

European stocks traded lower after the S&P 500 fell for a third day on economic worries.

Tariff worries may also keep investors on edge after the U.S. threatened countermeasures against the EU over perceived discriminatory tech regulations impacting American companies.

The Trump administration singled out prominent companies, including Accenture Plc, Siemens AG and Spotify Technology SA, as possible targets for new restrictions or fees.

Thomas Regnier, a spokesman for the European Commission, said that "as we have made clear many times, our rules apply equally and fairly to all companies operating in the EU".

In the European trading today, the pound fell to a 1-week low of 1.3312 against the U.S. dollar and a 5-day low of 1.0625 against the Swiss franc, from early highs of 1.3427 and 1.0679, respectively. If the pound extends its downtrend, it is likely to find support around 1.31 against the greenback and 1.05 against the franc.

Against the yen and the euro, the pound edged down to 207.06 and 0.8797 from early highs of 207.99 and 0.8750, respectively. The pound may test support near 205.00 against the yen and 0.88 against the euro.

Looking ahead, U.S. MBA mortgage approvals data and U.S. EIA crude oil data are slated for release in the New York session.