By CountingPips.com
The British pound sterling has advanced against many of its currency rivals today in forex trading as monthly inflation data came in higher than expected. The British currency has been gaining ground on the Japanese yen, US dollar, Canadian dollar, Swiss franc and the Australian dollar while the pound has lost some ground to the euro in today’s FX
Inflation data released out of the UK today increased more than expected in December and brought the inflation rate to an 8-month high, according to the report by National Statistics. The U.K.’s consumer price index increased by 1.0 percent in December following a November increase of 0.4 percent.
The gain in December was the highest monthly increase on record and brought the annual rate of inflation to 3.7 percent following an annual rate of 3.3 percent in November.
Economic forecasts had expected the monthly inflation increase to measure 0.7 percent and the annual rate to reach 3.4 percent. Increases in the prices of air transport, fuel, gas and food contributed to the inflation advance.
The record increase has prompted speculation that the Bank of England may need to act and raise rates to combat inflationary pressures as inflation is above the bank’s preferred 2 percent target.
The pound sterling responded by gaining close to 100 pips against the Japanese yen and US dollar today while jumping over 150 pips versus the Canadian dollar.
GBP/CAD Daily Chart – The British pound sterling rising sharply today versus the Canadian dollar in forex trading to trade at its highest level since December 15th. After breaking through resistance above the 1.5830 level the GBP/CAD may advance to test the 1.6000 exchange rate.
