The pound took a dive in mid-morning trading on Tuesday after the latest inflation data from the Office for National Statistics missed the forecasts of economists.
The ONS said that the UK’s consumer price index — the key measure of inflation — was down to 0.9% year-on-year in October, dropping from 1% in the previous month, and significantly below the expected 1.1% inflation forecast by economists.
Core inflation figures, which strip out volatile goods like oil and food, fell to 1.2% in the month, down from 1.5% at the previous reading.
That miss sent sterling — which was already lower on the day — sharply downward against the dollar, dropping as low as $1.2401. It then popped back upwards pretty quickly, and as of 10.30 a.m. GMT (5.30 a.m. ET) is trading at $1.2430, a loss of around 0.5% on the day.
Here is the chart:
Sterling has now extended its losses into a second consecutive day, following a significant slide against the dollar on Monday after US bond yields soared in Asian trade, which in turn, lit a fire under the US dollar which rallied hard across the board.
It is likely to react to any significant comments from Bank of England Governor Mark Carney as he speaks in front of the House of Commons Treasury Select Committee late on Tuesday morning.