The British pound fell against the dollar and the euro on Wednesday after lower-than-expected British inflation data suggested the Bank of England might not have to raise rates quite as high as expected.
The pound dropped as much as 0.8% against the dollar to $1.2931, and also weakened versus the euro after figures showed British inflation fell more than expected in June and was at its slowest in more than a year at 7.9%.
The dollar climbed to a one-week high on the Japanese yen and was last up 0.4% at 139.6.
Bank of Japan Governor Kazuo Ueda said on Tuesday there was still some distance to sustainably achieving the central bank's 2% inflation target, signalling his resolve to maintain ultra-loose monetary policy for the time being, in contrast to the hawkishness at other major central banks.
The New Zealand dollar was also volatile, briefly spiking after consumer inflation came in slightly above expectations in the second quarter, but last trading down 0.5% at $0.6245.
Elsewhere, the euro was steady at $1.1222, away from the previous session's 17-month peak of $1.1276, and that left the dollar index slightly stronger at 100.1, rebounding from a 15-month low hit in the previous session.
The dollar has paused its steep decline last week in the wake of a cooler-than-expected U.S. inflation reading that led to traders pricing in an imminent peak in Federal Reserve rates.
Economists polled by Reuters expect the Fed to deliver a 25-basis-point rate hike at its upcoming policy meeting this month, with a majority betting that will bring an end to the central bank's current monetary tightening cycle.
In summary, the British pound fell against the dollar and the euro on Wednesday after lower-than-expected British inflation data suggested the Bank of England might not have to raise rates quite as high as expected. The dollar also rose against the Japanese yen, while the New Zealand dollar was volatile after consumer inflation came in slightly above expectations in the second quarter. The euro was steady against the dollar, while the dollar index was slightly stronger.

calendar_month19/07/2023 10:53 am