Pound Rises As UK Inflation Accelerates More Than Forecast

The British pound strengthened against other major currencies in the European session on Tuesday, after data showed that British consumer price inflation accelerated at a faster-than-expected pace in August.

Data from the Office for National Statistics showed that the consumer prices of U.K. economy climbed 2.9 percent year-over-year in August, faster than the 2.6 percent rise in July. The annual growth was forecast to increase to 2.8 percent. On a monthly basis, consumer prices grew 0.6 percent in August, just above the 0.5 percent gain expected by economists.

Another report from ONS showed that output price inflation accelerated for the first time in six months in August.

Output prices climbed 3.4 percent yearly, faster than the 3.2 percent increase in July. Meanwhile, inflation was expected to ease to 3.1 percent. On month, output prices rose 0.4 percent from July, when it edged up by 0.1 percent.

Input price inflation quickened to 7.6 percent in August from 6.2 percent in the preceding month. Month-on-month, input prices went up 1.6 percent in August, reversing a 0.2 percent drop in July. It was the first increase in six months.

Meanwhile, European stocks traded higher as easing geopolitical tensions as well as receding Hurricane Irma fears served to improve investors' appetite for risk.

Investors eagerly await the latest employment and wages data out on Wednesday for further clues as to the Bank of England's policy decision on Thursday.

In the Asian trading today, the pound held steady against its major rivals.

In the European trading, the pound rose to a 1-year high of 1.3282 against the U.S. dollar, from an early 4-day low of 1.3161. The pound may test resistance near the 1.33 region.

The pound advanced to more than a 5-week high of 1.2708 against the Swiss franc, from an early low of 1.2560. The pound is likely to find resistance around the 1.28 region.

Against the euro and the yen, the pound climbed to near 6-week highs of 0.9003 and 145.71 from early lows of 0.9083 and 143.91, respectively. If the pound extends its uptrend, it is likely to find resistance around 0.89 against the euro and 148.00 against the yen.