RTTN:Pound Slides Further Against Dollar And Yen After U.K. Inflation Data
(RTTNews) - The pound that declined against the dollar and the yen in early Tuesday European deals on renewed Eurozone worries extended its slide after a report showed at 4:30 am ET that the U.K. annual inflation accelerated more than expected in September.
Data from the Office for National Statistics showed that consumer price inflation rose to 5.2 percent from 4.5 percent in August and also remained above the 4.9 percent consensus forecast.
Month-on-month increase in consumer prices came in at 0.6 percent, the same rate of increase as seen in August, but above the 0.4 percent rise forecast by economists.
The Bank of England Governor Mervyn King said earlier this month that consumer price growth will probably peak in September and slow "sharply" in 2012.
At its monetary policy meeting held on October 05 and 06, the U.K. central bank unexpectedly expanded its quantitative easing program by GBP 75 billion to stimulate the ailing U.K. economy amid concerns about debt contagion and severe strains in bank funding.
The nine-member Monetary Policy Committee headed by Governor Mervyn King increased the stock of asset purchases financed by the issuance of central bank reserves to GBP 275 billion from GBP 200 billion.
The pound is currently trading at a 5-day low of 120.55 against the yen, down 0.9 percent from an Asian session high of 121.61. If the pound weakens further, it may likely target the 119.5 level.
The pound that strengthened to 1.5824 against the dollar at 12:20 am ET lost 0.7 percent thereafter and the pair is presently trading at a 5-day low of 1.5707. The next downside target level for the pound is seen at 1.560.
The pound that jumped to 1-week highs of 1.4210 against the franc and 0.8693 against the euro at 4:30 am ET lost few pips thereafter and is now trading at 1.4190 and 0.8703, respectively.
German economic sentiment worsened considerably in October amid Eurozone's protracted debt crisis, figures from the Mannheim-based ZEW Centre for European Economic Research showed.
The corresponding indicator fell to -48.3 in October from -43.3 in September, well below the consensus forecast of -45.
Traders are now likely to focus on the New York session, in which the U.S. PPI for September, Treasury Department's report on the flows of financial instruments into and out of the U.S. for August, NAHB housing market index for October are expected.
The Federal Reserve Chairman Ben Bernanke is scheduled to speak to a Boston Fed Bank conference on the long term effects of the great recession at 1:15 pm ET.
