GBP/USD extends losses after U.K. trade deficit, CPI data

ForexNewsNow | Published on October 12, 2010 at 4:53 am

GBP USD - the Union JackNEW YORK (Forex News Now) – Sterling extended losses against the dollar on Tuesday, following a raft of mixed data on Britain’s trade deficit and U.K. consumer price inflation.

In early European currency market trading, GBP/USD hit 1.5804, down 0.49 percent on the day.

Britain’s statistics bureau said earlier that its core consumer price index, which excludes prices for energy, food, alcohol and tobacco, rose 2.7 percent year-on-year in September, after rising 2.8 percent in August. Analysts had expected a more modest increase of 2.6 percent in the September’s core CPI, two currency market trading news outlets reported.

However, data published by the Office for National Statistics also showed that Britain’s trade deficit shrank by less than expected in August.

According to GBP USD analysis, cable was likely to touch support around the low of Sept. 30, 1.567, and encounter immediate resistance around the high of Oct. 7, 1.6018.

Also Tuesday, a senior Bank of England official said BoE policymakers face competing risks of not doing enough to curb inflation on one side and tightening policy too soon on the other, Reuters reported.

“The difficulty today is one that monetary policy must address – this is to balance the risks of removing the stimulus from expansionary policy too soon, starving a recovery while it is still immature, against the risk of allowing inflation and inflation expectations to become stuck at above the target level,” Monetary Policy Committee member David Miles was quoted as saying.

Elsewhere, sterling rose versus the euro: EUR/GBP traded at 0.872, down 0.21 percent, according to intraday analysis.

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