* Graphic: sterling and gilt yields bit.ly/2dgAXn1
* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh
* Graphic: Trade-weighted sterling since Brexit vote tmsnrt.rs/2hwV9Hv
By Marc Jones
LONDON, Feb 14 Sterling retreated from its
highest level in a month against the euro on Tuesday, after UK
inflation data came in below forecast, adding to a handful of
subdued economic numbers over the past couple of weeks.
The figures still showed the fastest rise in consumer prices
since June 2014, driven by higher fuel prices, but the headline
1.8 percent year-on-year reading was short of the 1.9 percent
increase expected by economists.
It was seen as doing little to push the Bank of England
towards an early rise in Britain's record low interest rates and
knocked the pound which on Monday had notched its first unbroken
six-day run of gains against the euro since early September.
Sterling fell 0.7 percent against the euro to 85.18 pence
, back to $1.2458 versus the dollar and saw
broadly similar moves against the Japanese yen and
"The hawkish calls (for the Bank of England to raise
interest rates) had been steadily growing in the background and
as soon as the data hit there was a bit of a reality check for
sterling," ING FX strategist Viraj Patel said.
"Focus now switches to the wages data tomorrow and if they
don't pick up as much as inflation, food prices etc... Then the
Bank of England will have to look through the inflation (rise)
and focus on the slowdown in growth."
The political rumblings from Britain's looming divorce from
the European Union also continued which kept UK government bonds
Speaking in Sweden, British Brexit minister David Davis said
Britain would not, as some media reports have suggested in
recent weeks, launch the formal EU exit procedure before the
bloc's leaders holds a summit on March 9-10.
Davis stuck to the previously flagged end of March
timeframe, meaning it could clash awkwardly with another EU
summit on March 25 being held to celebrate the bloc's 60th
"The 9th or 10th is not a date I recognise in terms of our
timetable. What we have said is by the end of March, sometime
during March," Davis said alongside Ann Linde, Sweden's minister
for EU Affairs and Trade.
The inflation data meanwhile added to an increasingly
complex outlook for Britain's economy, which up until now has
been fending off economists worries surrounding Brexit.
Below the headline numbers, other data showed the prices
paid by factories for fuel and materials rose at an annual rate
of 20.5 percent, the biggest leap since 2008 and underscoring
the pressures currently building on UK firms.
The cost of crude oil alone was more than 88 percent
higher than a year earlier - the biggest increase since June
2000 - overwhelmingly driven by global rebound in prices. The 17
percent post-Brexit vote slump in the pound compounds that.
"The latest rise in CPI was mainly due to rising petrol and
diesel prices, along with a significant slowdown in the fall in
food prices," ONS statistician Mike Prestwood said.
(Additional reporting by William Schomberg; Editing by Alison