Sterling eased on Wednesday after data showed British inflation cooled more than forecast in October, reinforcing expectations that the Bank of England (BoE) will be cutting interest rates by the middle of next year.

The British consumer price index (CPI) rose by 4.6% in the 12 months to October, from September's 6.7% increase, according to the Office for National Statistics.

It was the lowest reading in two years and below forecasts for a reading of 4.8%.

Sterling was last down 0.2% on the day at $1.2471 by 0724 GMT, compared with $1.2487 shortly before the data.

The euro was up 0.1% against the pound at 87.135 pence.

Core inflation, which strips out food and energy prices, also rose less than expected, up 5.7% compared with 6.1% in September, and below estimates for a reading of 5.8%.

Inflation has been on a downward path since last October's four-decade high of 11%, but it has proven more stubborn in Britain than elsewhere and is still well above the BoE's target rate of 2%.

The government of Prime Minister Rishi Sunak pledged this year to halve inflation by the end of 2023, without specifying an outright level.

On Wednesday, the finance ministry said it had met that goal.

Source : Reuters