Pound advances after inflation rises to two-year high

By @ibtimes on

The British pound soared after the rise in UK inflation to the highest level in two years as it increased speculations the BoE will raise interest rate next month to halt price acceleration that may derail recovery.

Data released today showed that CPI for the year ending February climbed to 4.4% from the prior 4.0%, while annual RPI leaping to 5.5% from 5.1%.

On the other hand, the downbeat public finances data did not push the pair down, ahead of Osborne's announcement of budget report tomorrow.

UK public finances showed a deficit of 7.0 billion pounds in February from the revised surplus of 14.8 billion pounds.

The British pound versus the dollar, it rose for the fourth consecutive session to 1.6370 after the breakout of strong resistance at 1.6350, where the day's high was seen at 1.6400 and low was recorded at 1.6290.

The trading range for today is among the key support at 1.6195 and the key resistance at 1.6500.

Concerning the euro-dollar pair, it pared its earlier advance to trade near the day's opening level at 1.4210 after it touched a high of 1.4248 and a low of 1.4201.

The euro has been gaining support since Trichet's announcement earlier this month that the ECB may raise interest rate next month to stop the rapid rise in prices which took inflation to 2.4% in February.

Today, European Finance Ministers agreed to put terms for the European Stability Mechanism that will be activated by mid 2013.

The trading range for today is among the key support at 1.4050 and the key resistance at 1.4420.

With regard to the dollar-yen pair, it witnessed some calmness after the strong moves that took place last week and earlier this week following the G7 intervention to halt the yen's appreciation.

The pair fell after it approached strong resistance at 82.00 which pushed it down to 81.00 levels. The day's high was hit at 81.28 and the low was at 80.82.

The trading range for today is among the key support at 79.00 and the key resistance at 81.75.

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