Forex Today: Pound Sterling slides on soft UK inflation data

Here is what you need to know on Wednesday, October 16:

Pound Sterling stays under selling pressure early Wednesday as markets assess September inflation readings from the UK. In the second half of the day, Export Price Index and Import Price Index data for September will be featured in the US economic docket. 

The UK's Office for National Statistics (ONS) reported that annual inflation in the UK, as measured by the change in the Consumer Price Index (CPI), declined to 1.7% in September from 2.2% in August. This reading came in below the market expectation of 1.9%. In the same period, the Producer Price Index (PPI) - Input declined by 2.3%. Finally, the Retail Price Index rose 2.7%, down sharply from 3.5% in August. GBP/USD turned south following UK inflation prints and was last seen losing more than 0.5% on the day below 1.3000.

The negative shift seen in the risk mood in the American session on Tuesday helped the US Dollar (USD) preserve its strength. The USD Index registered small gains on Tuesday and continued to edge higher early Wednesday. At the time of press, the index was trading at its highest level since early August above 103.30. Meanwhile, US stock index futures trade mixed after Wall Street's main indexes registered large losses on Tuesday.

During the Asian trading hours, the data from Japan showed that Machinery Orders declined by 1.9% on a monthly basis in August, following the 0.1% decline recorded in July. USD/JPY showed no immediate reaction to this data and was last seen moving sideways in a narrow range above 149.00.

EUR/USD finds it difficult to stage a rebound after closing in the red on Tuesday. The pair inches lower in the European morning on Wednesday and trades below 1.0900.

AUD/USD stays on the back foot and fluctuates in negative territory below 0.6700 early Wednesday. In the Asian session on Thursday, September employment data from Australia will be watched closely by investors. The market expectation is for the Unemployment Rate to hold steady at 4.2%.

After reaching its highest level in over two months above 1.3830 on Tuesday, USD/CAD reversed its direction and snapped a nine-day winning streak after the data from Canada showed that the BoC Consumer Price Index Core rose 1.6% on a yearly basis in September, compared to the 1.5% increase recorded in August. At the time of press, USD/CAD was trading in a tight range below 1.3800.

Gold continues to edge higher early Wednesday and trades at its highest level since September 26 above $2,670.