LONDON: Sterling was little changed against the dollar on Monday, pinned near its lowest point in over five weeks, as expectations of monetary tightening from the Bank of England have been pushed further into the future.
The pound, whose bullish eight-month run was already running out of steam, shed more than 1 percent against the greenback last week, hit by Janet Yellen's hint that US interest rates could rise early next year.
By 0906 GMT the pound was flat against the pound at $1.6487. The euro was flat at 83.56 pence. Expectations that UK interest rates will rise in the near future have receded as the Bank of England has broadened the parameters which feed into interest rate decisions.
"They've watered down forward guidance and now it's much more nebulous as to when rates might be raised," said Neil Mellor, strategist at BNY Mellon. "It's now in the hands of the data." One such data point is the UK CPI data which is due on Tuesday.
CPI for February is forecast at 1.7 percent, compared to 1.9 percent for January.
"A further decline in the headline inflation rate is expected by the market for February, which could add to the downside pressure on the pound in the near term, despite the more encouraging growth and activity data seen recently," said Morgan Stanley in a note.
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