Sterling slid 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, while the latest dovish comments from the Bank of Japan caused the yen to soften.

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%.

That was the British currency's lowest in a week against the dollar, as it continued to roll off a 15-month high of $1.3144 hit Thursday.

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.

Source : Reuters