The pound declined against most of its major opponents on Tuesday despite a report showed that the consumer price inflation in the U.K. accelerated more than expected in May.
Higher-than-forecast inflation usually provides room against the Bank of England to expand its stimulus program, which is a bullish bias for the pound.
The latest figures from the Office for National Statistics showed that the rate of inflation rose to 2.7 percent in May from 2.4 percent in April. Economists expected the rate to rise to 2.6 percent.
The inflation rate remains above the Bank of England's 2 percent inflation target and has thus become highly unlikely for incoming governor Mark Carney to raise monetary stimulus in his first meeting in July.
On a monthly basis, CPI rose 0.2 percent, the same pace as in the previous month. Economists had forecast the index to rise 0.1 percent.
The pound declined to a 4-day low of 1.5648 against the greenback, pulling away from Monday's fresh 4-month high of 1.5750. The pound may eye next immediate support around the 1.556 level.
The pound depreciated to a 1-week low of 0.8550 against the euro from yesterday's close of 0.8501. On the downside, next likely support for the pound is visible around the 0.86 level.
Germany's investor confidence rose more-than-expected in June, after remaining largely unchanged in the previous month, results of a survey by the Mannheim-based Centre for European Economic Research/ZEW showed today.
The ZEW Indicator of Economic Sentiment climbed to 38.5 from 36.4 in May. Economists were looking for a score of 38.1. The latest reading is the highest since March.
The pound eased from an early high of 1.4514 against the Swiss franc to settle a 5-day low of 1.4381 around 5:25 am ET. Further bearish extension could lead the pair piercing the 1.43 level, which would be its lowest level in almost 2 months.
Looking ahead, the U.S. CPI, building permits and housing starts - all for May would garner market attention in the New York session.
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Forex News
June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.