LONDON (Reuters) - Britain’s pound fell back below $1.25 and weakened sharply against the euro on Tuesday after inflation data for January came in below forecast, adding to a handful of worse-than-expected economic numbers over the past couple of weeks.
Consumer prices rose at the fastest pace since June 2014 last month, driven by higher global oil prices and the Brexit vote-fuelled fall in the value of sterling, the official data showed.
But at 1.8 percent year-on-year, headline inflation was below a consensus Reuters poll forecast of 1.9 percent and was read as doing little to push the Bank of England towards an early rise in interest rates.
The data showed the scale of the pressures building on producers, however, from the fall in the value of the pound over the past year. Prices paid by factories for fuel and materials rose at an annual rate of 20.5 percent.
Sterling fell half a percent from around $1.2525 before the data to $1.2463 GBP=. It sank 0.75 percent on the day to 85.20 pence per euro EURGBP=.
British government bond prices rose after the data, pushing yields on sterling lower. March Gilt futures FLGcv1 were about 10 ticks higher at 0935 GMT.
Reporting by Patrick Graham and William Schomberg; editing by Marc Jones