Investing.com - The pound fell to session lows against the dollar on Tuesday after data showed that the U.K. entered into negative inflation last month for the first time since 1960.
GBP/USD was down 0.63% to 1.5555 from around 1.5576 ahead of the data.
The Office for National Statistics said the annual rate of inflation dipped 0.1% in April after remaining unchanged in the previous two months. Economists had expected annual inflation to remain unchanged at zero.
Consumer prices rose just 0.2% from a month earlier the ONS said, compared to forecasts for an increase of 0.4% after a 0.2% increase in March.
The OSN said the decline in inflation was due in large part to lower transport costs, but alcohol, clothing, and household goods were also all cheaper compared to the same month last year.
Last week Bank of England Governor Mark Carney said the central bank believed inflation could turn negative in the short term, but reiterated that prices would then pick back up in the coming months before returning back to its target of 2% in two years’ time.
Recent data showing that wage growth is picking up have offset fears over the possibility of a prolonged period of deflation.
The pound remained higher against the euro, with EUR/GBP down 0.44% to 0.7195.
The euro came under renewed selling pressure on Tuesday after senior European Central Bank policymaker Benoit Coeure said it is planning to speed up the pace of its bond-buying stimulus program before the summer in order to avoid the “notably lower market liquidity” in late July and August.
Fears over the prospects of a Greek default also continued to pressure the single currency, even after the country’s labor minister said Tuesday that an agreement with its lenders on a cash-for-reforms deal would soon be reached.