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Pound Falls On Doubts Over Coronavirus Vaccine

The pound dropped against its major counterparts in the European session on Wednesday on falling European shares, as a report raised doubt about Moderna's coronavirus vaccine that led a rally on Monday.

Overnight, STAT News said that new data from an early-stage trial is not conclusive enough to yet show it is effective.

Rising coronavirus cases in countries such as India, South Africa and Mexico also raised fears that the pandemic is far from over.

Data from the Office for National Statistics showed that UK inflation slowed to the lowest since 2016 on weak oil prices in April.

Consumer price inflation eased to 0.8 percent in April from 1.5 percent in March. Economists had forecast the rate to ease to 0.9 percent. The latest rate was lowest since August 2016.

Core inflation that excludes energy, food, alcoholic beverages and tobacco, slowed to 1.4 percent in April from 1.6 percent in March.

On a monthly basis, consumer prices dropped 0.2 percent after remaining flat in March. Prices were forecast to drop 0.1 percent.

Another report from the ONS showed that output prices declined for the first time since June 2016.

Output prices decreased 0.7 percent annually in April reversing a 0.3 percent rise in March. Economists had forecast a 0.4 percent decrease.

The pound slipped to 0.8955 against the euro, after rising to 0.8910 at 5:00 pm ET. The pound is likely to challenge support around the 0.92 level, if it weakens again.

Final data from Eurostat showed that Eurozone inflation slowed more than initially estimated in April to the lowest since 2016.

Inflation slowed to 0.3 percent from 0.7 percent in March. The rate was revised down from 0.4 percent estimated on April 30. This was the lowest since August 2016.

The pound fell to 1.2222 against the greenback, from a high of 1.2276 seen at 9:45 pm ET. The pound is seen finding support around the 1.20 mark.

The U.K. currency reached as low as 1.1829 against the franc, compared to yesterday's closing value of 1.1900. The next possible support for the pound is seen around the 1.16 level.

The pound eased off to 131.57 against the yen, after having risen to 132.42 at 8:30 pm ET. The pound is poised to find support around the 127.00 level.

Looking ahead, Canada CPI for April and wholesale sales for March will be out in the New York session.

Eurozone consumer sentiment index for May is due at 10:00 am ET.

At 2:00 pm ET, the Fed minutes from the April 28-29 meeting are set for release.

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