The pound firmed against its major counterparts in the European session on Wednesday, as the nation’s consumer price inflation accelerated in March led by rising costs of fuel and clothes.
Data from the Office for National Statistics showed that consumer prices advanced 0.7 percent year-on-year, faster than the 0.4 percent increase seen in February. But inflation was slightly below economists’ forecast of 0.8 percent.
On a monthly basis, inflation rose to 0.3 percent, as expected, from 0.1 percent a month ago. This was the second consecutive increase.
Core inflation that excludes prices of energy, food, alcoholic beverages and tobacco, climbed to 1.1 percent from 0.9 percent. The annual rate matched economists’ expectations.
Separate report from the ONS showed that output price inflation came in at 1.9 percent in March, up from 0.9 percent in February. This was the third consecutive month the rate has been positive and the highest the annual rate of output inflation has been since April 2019.
Meanwhile, monthly growth in output prices eased to 0.5 percent from 0.7 percent in the prior month.
Input price inflation accelerated to 5.9 percent from 3.3 percent in February. On month, input prices gained 1.3 percent versus 0.9 percent in the previous month.
The currency was further underpinned by risk appetite, amid a batch of strong earnings.
The pound reached as high as 0.8613 against the euro, up from a low of 0.8642 seen at 1:00 am ET. The pound is seen finding resistance around the 0.83 level.
The pound broke the 1.28 mark against the franc, touching 1.2801. The pair had ended yesterday’s deals at 1.2749. The pound is likely test resistance around the 1.32 area.
The pound reversed from the Asian session’s 2-day low of 150.32 against the yen, with the pair trading at 150.97. Next key resistance for the pound is seen around the 154.00 mark.
S&P Global Ratings maintained Japan’s sovereign ratings with ‘stable’ outlook on Wednesday.
The rating was affirmed at ‘A+’ citing the country’s exceptional external position, prosperous and diversified economy, political stability, and savings-rich financial system.
The pound recovered from a 2-day low of 1.3910 against the greenback and was trading at 1.3923. If the pound rises further, 1.41 is likely seen as its next resistance level.
Looking ahead, Canada CPI for March will be published in the New York session.
At 10:00 am ET, the Bank of Canada announces decision on interest rates. Economists forecast the benchmark rate to hold at 0.25 percent.