Sterling falls to bottom driven by inflation report

Posted 18 April, 2018

The sterling has touched the session's bottom on Wednesday given a year-low inflation rate recorded in March which makes interest rate upturn by BOE less possible in May.

The sterling to US dollar exchange rate was seen at 1.4209 (1.4275 earlier). In the pair with the European currency, the sterling slackened as well – euro reached some 0.8711.

According to the UK Office for National Statistics, the March inflation slowed down to 2.5% in March, against 2.7% in February. As a result, this was the lowest rate over the past year – forecasts were voiced at 2.7%.

The core inflation was slower at 2.3% y-o-y over the period under review, compared to 2.4% increase in February and anticipated hike to 2.5%.

With slower inflation coming closer to BOE's target, the interest rate lift expected in May seems to become less real.

The March figures confirmed that the cost of living decreased in the UK. Specifically, the average salary in the country rose to 2.8% in December-February, as the data showed. This means that the increase in salaries was above the inflation rise for the first time over the year.

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