Recent inflation data in the UK put pressure on the pound. GBPUSD has turned to decline from 1.29 after the release of disappointing inflation data for January.

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Official data from ONS noted overall consumer prices decline by 0.8% in January and annual inflation slowdown to 1.8%. A year earlier, this figure was at 3%. It is also worth noting that other inflation indicators – the retail price index and producer prices were also weaker than expected. A sharp inflation drop is considered a sign of sluggish economic activity and additionally reduces the chances of interest rates increase by the Bank of England in the near future.

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Earlier this week, poor UK performance was already in the spotlight of the market after report notes GDP to decline by 0.4% and industrial output fell by 0.5% in December. The deterioration of business performance is due to increasing uncertainty over Brexit.

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