(Reuters) – The pound sterling rose slightly against the euro and the dollar after data showed British inflation returned to the Bank of England's 2% target level in May for the first time in nearly three years.
The decline in annual consumer price inflation from April's reading of 2.3% is in line with the median forecast of economists in a Reuters poll and represents a sharp decline from the 41-year high of 11.1% reached in October 2022.
The euro fell by 0.04% to 84.46 pence against the pound from 84.48 pence just before the data was released. The British pound rose 0.05% against the dollar to $1.2713, after trading at $1.2704 earlier.
Markets expect about a 50% chance of a first rate cut by August and nearly half a percentage point in monetary easing in 2024.
The Bank of England meets on Thursday to discuss interest rate policy, but is not expected to make any changes.
