Pound halts rally versus dollar ahead of U.K. CPI report

NEW YORK (Forex News Now) – Sterling fell versus the dollar on Tuesday, snapping a 2-day rally, as FX traders awaited a key report on U.K. consumer price inflation and data on the U.S. housing market and manufacturing sector.

In European morning currency trading, GBP/USD struck 1.5647, down 0.11 percent on the day, after falling from the daily high of 1.5695.

Britain’s statistics agency was set later to release data on its Consumer Price Index in July, which is expected to show that inflation remained significantly higher than the government’s target, prompting Bank of England Governor Mervyn King to write another letter to the U.K. finance minister.

According to forex analysis, GBP/USD was likely to touch immediate support around Monday’s low, 1.5535, and encounter resistance around the high of Aug. 6, 1.5998.

The pound’s losses also came ahead of closely watched monthly reports on U.S. building permits and producer price inflation.

Elsewhere, sterling fell versus the yen: GBP/JPY traded at 133.49, down 0.12 percent.