Pound Slides On Softer-than-expected U.K. Inflation Data

The British pound weakened against other major currencies in the European session on Wednesday, after data showed that the U. U.K. inflation turned softer than anticipated in July.

The slower-than-expected inflation for July, spurred expectations among traders about further interest-rate cuts by the Bank of England (BoE).

Data from the Office for National Statistics showed that the U.K. consumer price index moved up 2.2 percent in July from a year ago, following June's 2.0 percent increase.

Inflation accelerated for the first time since last December. However, inflation was slightly slower than the expected 2.3 percent.

Month-on-month, consumer prices fell 0.2 percent, in contrast to the 0.1 percent rise in June.

Another report from the ONS showed that factory gate inflation softened unexpectedly to 0.8 percent in July from 1.0 percent in June. Prices were forecast to climb 1.2 percent.

Month-on-month, output prices remained flat compared to June's 0.7 percent decrease.

At the same time, input prices posted an annual growth of 0.4 percent after staying flat in June. On month, input prices slid 0.1 percent but slower than the 0.4 percent fall in June.

In the European trading now, the pound fell to a 5-day low of 0.8574 against the euro, from an early high of 0.8544. The pound is likely to find support near the 0.86 region.

Against the U.S. dollar and the yen, the pound edged down to 1.2819 and 188.44 from early highs of 1.2868 and 189.32, respectively. If the pound extends its downtrend, it is likely to find support around 1.26 against the greenback and 180.00 against the yen.

The pound edged down to 1.1088 against the Swiss franc, from an early near 2-week high of 1.1138. On the downside, 1.15 is seen as the next support level for the pound.

Looking ahead, U.K. house price data for June, Eurozone flash GDP data for the second quarter and industrial production figures for June are due to be released in the European session.

In the New York session, U.S. mortgage approvals data, U.S. CPI data for July and U.S. EIA crude oil data are slated for release.