During early European deals on Tuesday, the British pound pared the gains it posted in Asian trading against other major currencies as UK's annual inflation slowed more than expected in October. The pound eased from a 5-day high against the euro and a 6-day high against the franc and the dollar.
The Office for National Statistics or ONS said UK consumer price annual inflation eased to 4.5% in October from 5.2% in September. Economists had expected annual inflation to slow to 4.8% in October.
Month-on-month, consumer prices unexpectedly dropped 0.2% in October, reversing a rise of 0.5% in September. Economists were looking for a monthly inflation of 0.1%.
Further, the ONS said the retail price index fell to 217.7 in October, representing a monthly fall of 0.3%. On a yearly basis, retail price inflation was 4.2%. After rising 5% in September, economists had predicted the retail price index to climb 4.5% in October.
The pound climbed to a 6-day high of 1.5094 against the dollar before losing ground at 2:55 am ET Tuesday. As of now, the pound-dollar pair is worth 1.4971 with 1.466 seen as the near term support level. The pair closed yesterday's North American session at 1.4989.
The pound jumped to a 5-day high of 0.8362 against the euro and a 6-day high of 1.8102 against the franc by about 3:55 am ET Tuesday. Thereafter, the UK currency weakened and it is currently quoted at 1.7976 against the franc and 0.8422 against the euro, compared to yesterday's close of 1.7970 and 0.8444, respectively. On the downside, the pound may likely target 1.757 against the Swiss franc and 0.864 against the single currency.
The German Q3 employment report, Italian September trade balance and the Swiss September retail sales, which were released today likely influenced the euro and the franc.
Swiss retail sales turnover in September climbed 6.4% in real terms on an annual basis, the Federal Statistical Office reported. Economists had anticipated just 0.8% annual growth in sales. Meanwhile, retail sales adjusted for sales days were up 2.4%.
Germany's Federal Statistical Office announced that the number of employed increased 1.5% or by 582,000 persons to 40.5 million in the third quarter. In the second quarter, the year-on-year growth in employment was 1.5%.
The Italian trade deficit widened to EUR2.58 billion in September as increase in imports outpaced export growth, a report from the statistical office ISTAT showed. In September 2007, the trade deficit stood at EUR1.49 billion. Economists were looking for a shortfall of EUR2.5 billion.
The pound lost ground against the yen after hitting a high of 145.89 by about 3:00 am ET Tuesday. At present, the pound-yen pair is worth 144.25, down from Monday's close of 144.54. The immediate support for the pair is seen around the 140.8 level.
Japan's Economic and Fiscal Policy Minister, Kaoru Yosano said today he is "not confident at all" about the economy to grow in the next fiscal year starting April 2009.
Yosano's statement came a day after the Cabinet Office revealed third quarter GDP figures. The Japanese economy contracted 0.1% in the third quarter of 2008 compared to the previous quarter. It marked the second consecutive quarter of decline and confirmed suspicions that Japan is in a technical recession. On an annualized basis, GDP was down 0.4% after a revised 3.7% contraction in the second quarter.
On the back of Yosano's comments, it is expected that the government may say in its annual economic forecast that an economic contraction is probable in the next fiscal. The government is set to release its annual forecast in mid-December.
Traders now await the US October PPI, net long-term TIC flows for September and the NAHB housing market index for November, which are expected to influence trading in the upcoming New York session.
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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.