The pound slid to a six-week low against the dollar after a government report showed inflation slowed more than economists forecast, giving the central bank more room to boost stimulus that tends to weaken a currency.
Sterling dropped versus all except one of its 16 major counterparts before the Bank of England publishes the minutes of its May 8-9 meeting tomorrow, which will reveal how many policy makers voted to boost asset purchases at the gathering. U.K. government bonds were little changed after rising when the inflation data was released.
“This is a negative for sterling because quite clearly weaker inflation opens the door for more monetary stimulus,” said Peter Frank, global head of head of currency strategy at Banco Bilbao Vizcaya Argentaria SA (BBVA) in London. “It’s not a huge undershoot but it’s a fairly weak number before tomorrow’s crucial minutes. It cements investor decision-making to sell sterling.”