UK inflation figure causes the pound to fall.

The GBP/USD cross climbed to $1.2547 in the early hours of this morning, as markets reacted to the news the President Trumps national security advisor had resigned following his dealings with Russia.

The dollar had also been edging lower as investors wait to hear from Fed Chair Janet Yellen this afternoon, when she testifies in front of the Senate Banking Committee for the Semi-annual Monetary Policy Report.

 

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Markets will be listening for clues about the Fed's plans for future rate hikes. After stating the U.S. central bank will look to raise interest rates three times this year, there are concerns that Trumps policies could prevent the Fed from taking action as quickly as everyone had hoped, which if happens could start to see the dollar give up some ground.

However, the gains the pound made this morning have been completely wiped out following the release of the latest UK inflation reading.

 

GBP/USD chart

Figures released by the Office for National Statistics showed that inflation rose from 1.6% in December to 1.8% in January, but fell short of the expected 1.9%.

The news caused the pound to fall across the board, with the GBP/USD cross dropping over 0.5% to leave the currency pair trading at $1.2465, as the lower inflation number could prevent the Bank of England raising interest rates in the near future.

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