Cable Jumps Towards Resistance As UK Inflation Rises For First Time In Six Months

By Benjamin Spier,

THE TAKEAWAY : UK inflation rises for the first time in six months -> Increased CPI could lower chance for further QE -> Cable rallies towards 1.6000 resistance level

UK inflation rose for the first time in six months as the Consumer Price Index for March came in 0.3% higher than February and climbed 3.5% on the year. The rate of inflation met monthly expectations but came in higher than the expected 3.4% when compared to March 2011. The Office for National Statistics in London released the report.

The numbers partially reflect a rise in food inflation, but are also the results of a rise in core CPI. The rise in CPI goes against the Bank of England’s forecast for a drop in inflation to 2% by year’s end. Today’s report could lower the chances of further quantitative easing measures being implemented at May’s MPC meeting.

Cable rose on the news of the elevated inflation and passed the 1.5950 mark. The pair is up for the day as it comes closer to the five-month resistance level of 1.6065. Sterling also rallied against the Euro after the reported inflation rise.
DailyFX is the forex news and research arm of FXCM, Inc (NYSE: FXCM), which provides currency trading and brokerage services and is an advertiser on TheStreet websites. Any opinions, news, research, analyses, prices, or other information is provided as general market commentary, and does not constitute investment advice. Dailyfx will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Currency trading involves significant risk of loss. Individual authors may hold positions in the currencies discussed in the article.

Original Article: http://www.dailyfx.com/forex/market_alert/2012/04/17/Cable_Jumps_Towards_Resistance_as_UK_Inflation_Rises_for_First_Time_in_Six_Months.html