The Great Britain pound fell to session lows against the U.S dollar and other major currencies on Tuesday after data showing that the U.K. fell back into negative inflation in September dampened expectations for higher interest rates from the Bank of England.
The Office for National Statistics reported that the consumer price index fell by 0.1% in September from a year earlier, after a flat reading in August. Economists had forecast an unchanged reading.
It was the first time since April that the annual rate of inflation fell below zero.
Consumer prices were down 0.1% from a month earlier the ONS said, compared to expectations for a flat reading.
The ONS said the largest contribution to the fall in inflation came from lower petrol prices, while lower prices for gas and clothing and footwear also pushed down the inflation rate.
The subdued inflation outlook eases pressure on the BoE to hike interest rates from record lows.
Sterling had strengthened earlier after brewer SABMiller (L:SAB) accepted a takeover proposal from Anheuser-Busch Inbev SA (N:BUD), in a deal worth £69 billion.
Intra-day bias remains bearish as 21 and 55 EMA are crossed to the downside on the 1 hour time-frame. Also SSRC oscillator is still showing signs of more sell off is expected in the pair. Am expecting a retest of 1.5199 low and a break of it might bring further decline to 1.5176 (weekly support 1).
Tomorrow investors would be monitoring closely the GBP Average Earnings Index 3m/y, Claimant Count Change, USD Core Retail Sales m/m and Retail Sales m/m.