Inflation Figures Send Pound Lower

Disappointing inflation figures are causing some trouble for the pound today. Sterling is lower against the dollar, and, while recovering against the euro and yen, is still trading somewhat choppily against other currencies.

Inflation figures are in for the United Kingdom, and they are worse than expected. Analysts had expected CPI to come in at 0.7 per cent for the month of December, but it came in at 0.5 per cent. PPI also showed a worse performance than expected, deepening from -8.2 per cent to -10.7 per cent.

The news means that the United Kingdom economy isn’t recovering quite as well as policymakers would like. As a result, the Bank of England may put off some of their monetary tightening. The policy divergence between the United States and the United Kingdom means that the dollar is gaining ground against the pound today.

Pound dropped initially against the euro and the yen, but sterling is now gaining on both currencies again as the day moves forward and stocks and gold offer some support.

At 12:52 GMT GBP/USD is still lower, down to 1.5174 from the open at 1.5178. EUR/GBP is down, falling to 0.7770 from the open at 0.7799. GBP/JPY is gaining ground, moving up to 179.9070 from the open at 179.6210.

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