The pound sterling strengthened against its major counterparts in the European session on Wednesday, as consumer price inflation accelerated in the country in March. Fuel and clothing prices are also higher.
Data from the Office for National Statistics showed that consumer prices rose 0.7% year-on-year, faster than the 0.4% rise seen in February. But inflation was slightly below economists’ forecast of 0.8%.
On a monthly basis, inflation rose to 0.3% as expected, up from 0.1% a month ago. This was the second consecutive increase in the indicator.
Core inflation, which excludes prices for energy, food, alcoholic beverages and tobacco, rose to 1.1%, up from 0.9%. The annual rate was in line with economists’ expectations.
A separate report showed that selling price inflation was 1.9% in March, up from 0.9% in February. This was the third month in a row that the indicator was positive. In addition, the indicator reached its highest annual level since April 2019.
Meanwhile, monthly growth in selling prices fell to 0.5% from 0.7% in the previous month.
Raw material price inflation accelerated to 5.9% from 3.3% in February. On a monthly basis, commodity prices rose 1.3% from 0.9% in the previous month.
The growth of the British currency was supported by an interest in risky assets.
The pound peaked at 0.8613 against the euro, climbing from a low of 0.8642 seen at 1:00 am ET. The pound may meet a resistance level around 0.83.
The pound broke 1.28 against the franc and touched 1.2801. The pair closed yesterday’s trading at 1.2749. The pound is likely to test the resistance around 1.32.
The British pound reversed from a 2-day Asian session low of 150.32 against the yen. The pair is currently trading at 150.97. The next key resistance for the pound is seen around 154.00.
On Wednesday, S&P Global Ratings maintained Japan’s sovereign ratings with a stable outlook.
The rating was affirmed at ‘A +’, citing the country’s exceptional external position, a thriving and diversified economy, political stability and a savings-rich financial system.
The pound sterling recovered from a 2-day low of 1.3910 against the US dollar and traded at 1.3923. If the pound continues to rise, then 1.41 is likely to be seen as its next resistance level.
Looking ahead, we note that the data on the Canadian CPI for March will be published at the New York session.
At 10:00 am ET, the Bank of Canada will announce its interest rate decision. Economists predict that the key interest rate will remain at 0.25%.