Home Forex Pound Lower on Inflation Data, Aussie Weaker on RBA Official Comments

Pound Lower on Inflation Data, Aussie Weaker on RBA Official Comments


The pound weakened against the dollar on Tuesday after the release of disappointing inflation data out of the United Kingdom. The Australian dollar fell further after comments from a Reserve Bank of Australia official weakened the currency.

Sterling dipped to 1.3298 during morning trade in Europe before settling at 1.3317. The Aussie was down 0.25% to 0.7547.

The pound’s losses were driven by a report from the U.K. Office for National Statistics, which showed that the consumer price index was at an annualized rate of 0.6% in August. Analysts were expecting a rate of 0.7%.

Compared to the previous month, consumer prices were up 0.3%. Economists predicted a 0.4% gain.

Core CPI, which excludes tobacco alcohol, food and energy, was up 1.3% in August, virtually unchanged from July’s reading of 1.4%.

Meanwhile, the Aussie was weakened by comments from an RBA official despite positive data out of China, Australian’s largest trading partner.

China reported that fixed asset investment was up 8.2% in August, which surpassed expectations of an 8% year-on-year gain. Industrial production was up 6.3%, beating expectations of a 6.1% rise year-on-year. Retail sales beat expectations, too, rising 10.6% compared to the 10.3% expected.

Christopher Kent, RBA assistant governor, said on Tuesday that the Aussie has not fallen as much as expected after cutting interest rates.

A report from the National Australia Bank showed that business confidence for August was at plus-6, higher than the previous survey, which came in at plus-4. Its business survey, however, declined from plus-8 to plus-7.

In the U.S., the dollar weakened against a basket of major currencies after a speech from Fed Reserve Governor Lael Brainard dampened expectations of a rate hike in the near future. The Fed is approaching its blackout period just ahead of its monetary policy meeting from September 20-21.