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Pound Mixed After UK Dec. Inflation Data

Jan 15 2013

The pound showed mixed performance against its major rivals in early deals on Tuesday after a report showed that the U.K. inflation remained at a 7-month high in the month of December.

While the sterling strengthened against the Swiss franc, it held steady versus the euro and drifted weaker against the dollar and the yen.

U.K. consumer price inflation remained unchanged at 2.7 percent for the third month in a row in December, the Office for National Statistics said today. The rate also came in line with economists' expectations.

Month-on-month, consumer prices climbed 0.5 percent, following a 0.2 percent rise in November.

Core inflation that excludes energy, food, alcoholic beverages and tobacco, slowed to 2.4 percent in December from 2.6 percent a month ago.

Residential property prices in the U.K increased at notably faster rate in November and the rate of growth exceeded economists' forecast, data released by the Office for National Statistics showed today.

The house price index increased 2.1 percent on an annual basis in November, faster than the 1.5 percent gain recorded in October. Economists had forecast a more modest increase of 1.6 percent.

On a monthly basis, the house price index moved up 0.5 percent in November, after rising 0.2 percent in October, data showed.

British home prices held steady in December, rising to the highest level since June 2010 helped by the impact of the Funding for Lending Scheme, the Royal Institute of Chartered Surveyors reported earlier today. The RICS House Price Balance rose to 0 from the November reading of minus-9.

Risk-sentiment was limited in the morning as investors await earnings results from big U.S. banks including JP Morgan Chase, Citigroup and Bank of America this week.

Concerns about the U.S. debt limit also returned to the fore after Treasury Secretary Timothy Geithner told Congress that the U.S. would exhaust the so-called extraordinary measures to avoid breaching the debt ceiling sometime between mid-February and early March.

Meanwhile, in a speech at the University of Michigan, Federal Reserve Chief Ben Bernanke suggested that he plans to stick with the bond-buying program until the recovery is on firmer footing.

While answering audience and online questions, Bernanke downplayed speculation that the central bank plans to scale back its quantitative easing program in the next few months.

The pound revisited the 1.49 level against the Swiss franc after it touched the level in the Asian session, rising as much as 1.4911 around 5:45 am ET, its strongest level since January 7. The next barrier for the cross is seen at 1.4950/60 and a move above this mark could set its strongest mark in more than a month.

The pound was range-bound against the euro in early deals, trading between 0.8327 and 0.83. The pound eased slightly versus the euro after having tested yesterday's key resistance level of 0.8328 in the morning.

Exports from euro area increased for the first time in three months in November, Eurostat reported today.

Shipments rose by seasonally adjusted 0.8 percent month-on-month, partially offsetting the 1.2 percent decrease in October. On the other hand, imports fell 1.5 percent, following a 0.8 percent rise.

As a result, the trade surplus increased to EUR 11 billion from EUR 7.4 billion in October.

German economic growth eased more than expected last year, due to significant slowdown in economic activity in the second half of the year, the latest figures from the Federal Statistical Office showed today.

The gross domestic product rose 0.7 percent in price-adjusted terms in 2012, much weaker than the 3 percent growth in 2011 and 4.2 percent expansion in 2010.

At the same time, inflation as per the consumer price index increased to 2.1 percent in December from 1.9 percent in the previous month, in line with the preliminary estimates.

Month-on-month, the consumer price index (CPI) advanced 0.9 percent during the month, which matched flash estimates.

The pound reached a 5-day low of 142.16 against the yen and a session's low of 1.6049 against the dollar around 6:45 am ET. If the sterling extends downtrend, likely support levels are seen at 140.80 against the yen and 1.60 versus the greenback.

The Bank of Japan on Tuesday lowered its economic assessment of eight out of the nine Japanese regions, adding to concerns that the economy may remain weak for some more time to come, largely due to weak exports.

Looking ahead, the U.S. retail sales, PPI, empire manufacturing and business inventories are expected to garner market attention in the New York session.

The material has been provided by Instaforex Company -
TAGS: Pound  Mixed  After  UK  Dec.  Inflation  Data   

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