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Sterling hit a three-week low against the euro on Tuesday, while gilt yields dipped, after data showed British inflation fell to a 12-year low in November, leaving the Bank of England under no pressure to raise interest rates.
Reflecting a slide in global oil prices, the consumer price index rose by an annual 1.0 per cent in November, compared with 1.3 per cent in October, the Office for National Statistics said on Tuesday.
Economists taking part in a Reuters poll had expected the CPI to slip back to 1.2 per cent.
The euro rose against sterling to 80.075 pence from around 79.84 pence before the inflation data, but then pared gains to trade at 79.78 pence, up 0.3 per cent on the day.
Against the dollar, the sterling slipped to a day’s low of $1.5610 from around $1.5638 beforehand, before reversing gains to trade up 0.3 per cent at $1.5692.
UK 10-year bond yields extended falls, hitting a day’s low of 1.757 per cent, down around 6 basis points on the day.
Britain’s FTSE 100 index rose after the UK inflation data was published. The index was up by 0.3 per cent at 6,200.91 points by 0932 GMT.
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