Pound Weakened by Slowing Inflation

The Great Britain pound weakened today as the reports showed that the core inflation slowed and the retail price index remained unchanged last month.

The consumer price index remained at 4.5 percent in May (year-on-year) as was expected. Yet the core inflation decreased to 3.3 percent from 3.7 percent, while only a small drop to 3.6 percent was expected. The retail price index surprised traders unpleasantly, remaining at 5.2 percent despite analysts’ predictions of growth to 5.3 percent.

There were some positive news to provide support to the pound. Nationwide consumer confidence rose to 55 in May from 44 in April even as it was expected to drop to 41. Still, the economy remains unfavorable to Britain’s currency at present.

GBP/USD fell to 1.6361 from 1.6369 as of 1:21 GMT today after it rose yesterday to 1.6441. GBP/JPY traded near 131.63 after rising from 131.72 to 132.02.

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