The pound extended its previous sessions' strong rally against most major currencies on Tuesday morning in New York as traders continued to weigh an earlier report showing the UK annual inflation stayed below the central bank's target of 2% for the second straight month in July. The pound climbed to multi-day highs against the currencies of the U.S, Europe and Switzerland.
The Office for National Statistics reported today that U.K's annual inflation stood at 1.8% in July, the same as in June. Economists had expected the inflation rate to slow to 1.5%. Month-on-month, consumer prices remained flat, while economists were expecting a 0.3% fall. Core inflation that excludes energy, food, alcohol and tobacco was 1.8% in July.
Further, the ONS report showed that retail prices declined 1.4% in July from the prior year, which was slower than the expected fall of 1.7% and June's 1.6% drop.
However, the Ernst & Young ITEM Club said UK's inflation is expected to decline in coming 2 to 3 months until last year's peak drops out of the yearly comparisons. Further, inflation is forecast to stay well below the target into 2011 as a growing output gap exerts deflationary pressure on the economy, Hetal Mehta, Senior Economic Advisor to the E&Y ITEM Club added.
The pound has gained more than 1.1 percent against the euro thus far today to touch a 10-day high of 0.853 around 10:35 am ET. This may be compared to yesterday's close of 0.8617. If the pound gains further, resistance is seen near the 0.846 level.
Germany's economic sentiment rose 16.6 points to 56.1 in August, a monthly survey from ZEW Center for European Economic Research said today. The expected reading was 45. The indicator stood well above the historical average of 26.5 points.
The assessment of the current economic situation stood at minus 77.2 in August, up 12.1 points. Economists were expecting the index to rise to minus 85.
The pound advanced to a 5-day high of 1.7838 against the Swiss franc by 10:35 am ET, up by more than 1.35 percent from its Asian session's fresh multi-week low of 1.7595. The pound-franc pair, which closed yesterday's trading at 1.7629, is presently worth 1.7808 with 1.79 seen as the next target level.
Bouncing back from yesterday's 1-month low, the pound advanced to a 4-day high of 1.6542 against the US dollar by 10:40 am ET. The pound has registered more than 1.15 percent gains against the greenback thus far from Monday's close of 1.635. The next upside target for the cable is likely to be seen around the 1.6675 level.
In the U.S., housing starts showed an unexpected decrease in July, according to a report released by the Commerce Department today, with the data likely to lead to some renewed concerns about the outlook for the housing market.
Housing starts fell 1.0 percent to an annual rate of 581,000 in July from the revised June estimate of 587,000. Economists had expected starts to rise to 598,000 from the 582,000 originally reported in the previous month.
At the same time, the U.S. Labor Department revealed that producer prices dropped 0.9 percent in July. This followed an advance of 1.8 percent in the previous month. Economists had expected the measure to slip 0.3 percent for the month.
Core prices, which exclude the volatile food and energy sectors, ticked down 0.1 percent in July. Economists were looking for core prices to edge up by 0.1 percent.
The pound that rose to a 4-day high of 156.89 against the Japanese yen in the early European session backed off in early New York deals on Tuesday. The pound drifted lower to 155.35 before bouncing back to 156.78 by 10:40 am. The pound-yen pair closed yesterday's trading at 154.53.
Japan's Cabinet Office, in a final report, revised upward the leading and coincident indices for June. The leading index stood at 79.9 in June, revised up from 79.8 estimated on August 6, and was also higher than the reading of 76.9 in May.
The coincident index was revised up to 88 from 87.8 estimated previously, and came in higher than the 87.1 in May. The lagging index was also revised upward, to 83.4 from 83.3 reported earlier.
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April 24, 2026 15:15 ET Economics news flow was relatively light this week even as the conflict in the Middle East continued, raising concerns for policymakers. In the U.S., spending data, initial jobless claims and pending home sales were the highlights. Business confidence in the biggest euro area economy was in focus in Europe. Inflation data from Japan gained attention in Asia.