UK inflation data reflected the expected pick up in prices in November. The Pound Sterling (GBP) picked up a little support over the course of European trade but Cable is finding it difficult to hold gains through the low 1.27s, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

CPI supports cautious BoE outlook

“Headline CPI rose 2.6% in the year (from 2.3% in October) while core CPI rose 3.5%, a little shy of the 3.6% forecast but still up from the prior month’s 3.3%. Services CPI was unchanged at 5.0% in the year—a minor positive, given forecasts for a rise to 5.1%. The data supports the outlook for cautious easing from the BoE in the coming months.”

“Sterling picked up a little support over the course of European trade but Cable is finding it difficult to hold gains through the low 1.27s. Unless spot can make sustained progress through 1.2720/30 which should prompt a retest of the low 1.28s, the pound is at risk of drifting back.”