On Tuesday, sterling slipped to two-month lows against its U.S counterpart, and softened in front the euro after the release of the U.K. disappointing inflation data.
U.K.'s consumer price index moved up a tad at its slowest pace over a year, slowed to 2.2% in October from the expected 2.5%. The soft data weighed on traders sentiments pushing them to trim forecasts over the BOE to raise interest rates soon.
The GBP/USD traded at 1.5918, declining 0.44%, up from a session low of 1.5854, the lowest since September 13th, and off from a high of 1.5992.
On the same day, Germany's annual inflation rate was not much better than the U.K one. Germany inflation rate slowed to 1.2% in October, the lowest level in three consecutive years, from 1.4% in September. Fears of weakening demand in the Eurozone clouded the market after the surprisingly ECB rate cut was announced last Thursday.
Excon Fuji Securities reported data released boosted the demand for the dollar, which was fueled further by last week’s strong U.S. jobs report that raised the expectations for the Federal Reserve to wind down its USD 85 billion monthly bonds purchase program.
Stimulus tools, including monthly bond purchases, are used to boost economic recovery by lowering long-term interest rates, and weakening the greenback in the process. Investors' uncertainty over the timing of a Fed decision to begin scaling back the pace of the monthly bond purchases trimmed the USD gains.
