The pound held steady on Thursday after hotter-than-expected consumer price data in the United States raised expectations of quicker interest rate hikes by the Federal Reserve, pushing the dollar higher.
The U.S. consumer price index rose 0.6% for January, one-tenth of a percentage point higher than expected, while year-over-year CPI rose 7.5%, or two-tenths more than economists polled by Reuters had expected.
That shunted the dollar up on concerns the Fed could take more aggressive action, sending the pound down 0.04% to $1.3532 having started the day in positive territory against the greenback.
Futures markets suggested a 50% chance of a 50bps hike in March, up from 30% before the inflation data were released.
The pound has traded skittishly in recent weeks amid a murkier outlook for the Bank of Englands monetary policy, with its chief economist saying on Wednesday it is reasonable for central banks to withdraw detailed guidance because of economic uncertainty.
The pound edged up against the euro to 84.15 pence.
