British Pound Down vs. US Dollar, Japanese Yen Ahead of UK CPI Report

The British pound was actually one of the stronger currencies of the day on Monday, except when it came to GBP/USD and GBP/JPY, as the pairs fell toward near-term support levels at 1.6250 and 159.00, respectively. The British pound could come under pressure on Tuesday, though, as UK inflation data will be released. While the May reading of UK CPI is projected to rise 0.3 percent, following a 0.2 percent gain in April, the annual rate may fall to an annual rate of 2.0 percent from 2.3 percent. Such a result would mark a 19-month low and would also bring CPI in line with the Bank of England’s (BOE) target. Nevertheless, the central bank has said in the past that they expect inflation to full much lower later in the year, and greater-than-expected declines could trigger British pound declines amidst fears that CPI will eventually fall negative.