COZforex: The pound pulled back from session lows against the dollar on Tuesday after official data showed that consumer inflation in the UK rise more than expected in May.

GBP/USD pulled back from 1.5663, the pair’s lowest since Friday, to hit 1.5682 during European morning trade, still down 0.24% for the day. COZforex senior currency strategist Ian • Quigley said, GBP/USD is predicted to find support at 1.5674, and a drop through could take it to the next support line of 1.5642. Meanwhile, the pair is predicted to find its first resistance at 1.5745, and a rose through could take it to the next resistance line of 1.5784.

The Office for National Statistics said the rate of consumer price inflation accelerated at a seasonally adjusted 2.7% in May, above expectations for a 2.6% increase and up from a seven month low of 2.4% in April.

The ONS said the rise was due to higher costs for air fares, motor fuel, clothing and footwear.

Core CPI, which excludes energy, food and tobacco costs, rise 2.2% up from 2% in April. Consumer prices rise 0.2% from a month earlier, compared to expectations for a 0.1% increase, after rising 0.2% in April.

Investors were looking ahead to outcome of the Federal Reserve’s meeting on Wednesday during uncertainty over the bank’s next move after Chairman Ben Bernanke said last month the bank could begin to taper asset purchases if the economy continued to improve.

The ZEW Institute was to release its closely watched report on German economic sentiment later Tuesday, while the US was to release official data on consumer inflation, building permits and housing starts.

(COZ forex UK)