GBP struggled to make much headway on Wednesday after data showed British prices rose slightly slower than expected in March, easing the pressure on the Bank of England to tighten monetary policy.
Annual consumer price inflation came in at 1.9 percent in March, below forecasts for a 2 percent rise and below the BoE’s target of 2 percent.
Data on Tuesday showed that British workers’ pay is rising and outstripping inflation, and combined with the lowest unemployment rate in 44 years, has taken the edge off the uncertainty about Brexit.
The pound dipped slightly from around $1.3055 to $1.3040 after the inflation numbers were published. Against the euro, sterling extended its losses and hit the day’s low of 1.1519, down 0.3 percent.
Economic data has failed to move the pound significantly in recent months as Brexit negotiations dominate the news agenda.
The BoE has signalled that it will lift interest rates to stop inflationary pressures from building, but it is highly unlikely to act until the Brexit process is resolved.
Tuesday offered a reminder of the sensitivity to Brexit-related news.
A reminder on Tuesday of GBP’s current sensitivity was demonstrated following a report in the Guardian newspaper that talks between the Labour opposition party and the ruling Conservative had stalled sent the pound tumbling. A spokesman for the Labour party denied that the talks had hit an impasse.