The British pound appreciated vis-Ã -vis the U.S. dollar today as cable tested offers around the US$ 1.4775 level and was supported around the $1.4545 level. Sterling was bid higher after February consumer price inflation expanded 0.9%, above expectations of a 0.2% gain. These data suggest consumer price inflation may not be as weak as expected and this has led to speculation that Bank of England€™s recently-launched quantitative easing measures may be relatively short-lived. At the core level, core consumer price inflation rose 0.7% m/m and 1.6% y/y. Other data saw February net mortgage lending grow to ‚¤3.9 billion from ‚¤3.4 billion in January. BoE Governor King downplayed today€™s surprising print in inflation and attributed the data to the decline in sterling. King also reaffirmed BoE€™s projections that inflation would undershoot its target band and said the conclusion of its quantitative easing framework would be dependent on inflation. Moreover, he said BoE is trying to raise the savings rate and added quantitative easing measures may take up to six months to have an impact. Cable bids are cited around the US$ 1.4410 level. The euro moved lower vis-Ã -vis the British pound as the single currency tested bids around the ‚¤0.9170 level and was capped around the ‚¤0.9360 level.
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