Sterling weakened slightly on Wednesday after data showed inflation in Britain fell last month to its lowest level since June 2016 as the coronavirus pandemic sucked demand from the global economy and caused oil prices to tumble.

Low inflation could give the Bank of England room to ramp up its stimulus programme when its policymakers meet on Thursday. The central bank is expected to announce an increase of at least 100 billion pounds in its bond-buying firepower.

Sterling was last trading down 0.3% at $1.2541 against a broadly stronger U.S. dollar and was 0.1% lower versus the euro at 89.51 pence.

The pound has risen more than 4% against the U.S. dollar in the last three months but is still far off levels seen before the new coronavirus sent global markets tumbling in March. It is also much lower in trade-weighted terms than it was before the Brexit referendum in June 2016.

Source : Reuters