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In contrast, the European Central Bank is grappling with falling price pressures and is likely to ease monetary policy next month.
The euro fell to 81.25 pence, its lowest since January 2013 and down 0.3 percent on the day. Bids from macro funds and corporate are cited at 81.10-8.15 pence.
Sterling was up 0.2 percent at $1.6845.