The British pound extended recent gains vis-Ã -vis the U.S. dollar today as cable tested offers around the US$ 1.5525 level and was supported around the $1.5295 level. Cable reached its highest level since 18 December and has been well-bid from the $1.44 handle on 22 April. Data released in the U.K. today saw April consumer price inflation moderate sharply as retail prices decline at their fastest pace since at least 1958. March CPI fell to +2.3% y/y from +2.9% y/y in March, the lowest rate since January 2008. Core CPI fell to an annual rate of +1.5% in April from 1.7%. One school of thought suggests cable has been well bid for the past several days on account of the political problems being faced by Brown€™s Labour government which has quickly found itself embroiled in an expenses scandal. There is growing speculation the Tory party could use the scandal to vault to power and the Tories are known to favour keeping the pound and not adopting the euro. Cable bids are cited around the US$ 1.5255 level. The euro moved lower vis-Ã -vis the British pound as the single currency tested bids around the ‚¤0.8765 level and was capped around the ‚¤0.8850 level.
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