LONDON: Sterling steadied against the dollar and euro on Tuesday as investors looked to data expected to show British consumer inflation stayed above the Bank of England's 2 percent target in March.
A 2.3 percent year-on-year rise in prices in February, which came after one BoE rate-setter voted in favour of a rate hike at its last policy meeting, fuelled expectations that rates could rise as soon as early 2018, which in turn shored up sterling.
But the pound has fallen back since the start of April, with comments from BoE Governor Mark Carney and fellow policymaker Gertjan Vlieghe pouring cold water on the idea that Britain's record-low interest rates could increase any time soon.
Data due at 0830 GMT is expected to show inflation steady at 2.3 percent in March.
"The underlying trend in UK inflation is still negative as the significant fall in the value of sterling will continue to fuel import prices. Note that input prices in the manufacturing sector increased by 19 percent in February, which at least partially will be passed on to UK consumers," wrote Rabobank strategists in a research note.
"Consequently, real disposable income will continue to shrink, which does not bode well for the demand-driven UK economy."
Sterling was flat at $1.2405 ahead of the data, and at 85.37 pence per euro.
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