Investing.com - Sterling slid to the day’s lows against the dollar on Tuesday after data showing that UK inflation slowed in December for the first time in six months, meaning that Britain’s cost of living squeeze eased.
GBP/USD was at 1.3756 by 04:54 AM ET (09:54 AM GMT), pulling further away from Monday’s peaks of 1.3819, the strongest level since Britain’s vote to exit the European Union in June 2016.
The consumer price index slowed to an annual rate of 3.0% last month the Office for National Statistics reported, down from November’s six-year high of 3.1% and the first decline since June.
The reading was in line the economists’ forecasts.
Underlying inflation, which strips out food and energy costs, slowed more than expected to 2.5% from a year earlier.
The drop in inflation showed that the impact of the steep fall in the pound in the aftermath of the Brexit vote is now fading, but consumer prices are still rising faster than wages, which grew by 2.3% in the past year.
The Bank of England has said it expects inflation to have peaked late last year and expects it to slowly fall over the next three years to just above its 2.0% target.
The BoE is widely expected to keep interest rates unchanged at 0.5% at its February meeting as it awaits indications of a pick-up in wage growth.
Sterling was steady against the euro, with EUR/GBP at 0.8888.