Pound Falls On Brexit Uncertainty

The pound declined against its major counterparts in the European session on Wednesday, as Brexit talks failed to reach a breakthrough, dampening hopes for striking a deal.

The DUP party rejected the proposal to create a customs border on the Irish Sea.

Talks resumed today, as UK and EU officials seek to iron out details ahead of the EU Council meeting tomorrow.

Data from the Office for National Statistics showed that UK consumer price inflation remained in September and factory gate price inflation was the weakest in three years.

Consumer prices advanced 1.7 percent year-on-year, the same pace of growth as seen in August. The rate was forecast to rise to 1.8 percent.

Another report from ONS showed that output price inflation eased 1.2 percent in September from 1.7 percent in August. The rate was the lowest since September 2016 and below the forecast of 1.3 percent.

On a monthly basis, output prices fell 0.1 percent compared to flat growth in August. Prices were forecast to gain 0.1 percent.

At the same time, input prices declined 2.8 percent annually versus a 0.9 percent drop in August. Economists had forecast a 1.7 percent drop.

The pound slipped to 1.2656 against the greenback, from Tuesday’s closing value of 1.2781. The next likely support for the pound lies around the 1.24 level.

The pound that closed Tuesday’s trading at 1.2768 against the franc weakened to 1.2615. If the pound drops further, 1.23 is possibly seen as its next support level.

The U.K. currency edged down to 137.50 against the yen, compared to yesterday’s closing quote of 139.14. The currency is likely to face support around the 135.00 level.

The pound dropped to 0.8715 against the euro from yesterday’s closing value of 0.8628. Next near term support for the pound is likely seen around the 0.88 level.

Data from Eurostat showed that Eurozone inflation eased more than initially estimated in September.

Inflation slowed to 0.8 percent in September from 1 percent in August. Price growth was initially estimated at 0.9 percent.

Looking ahead, U.S. business inventories for August, NAHB housing market index for October, Fed’s Beige book report, U.S. retail sales and Canada CPI for September will be featured in the New York session.

The material has been provided by InstaForex Company – www.instaforex.com