Headline British consumer price inflation fell to 7.9% year-on-year in June, against expectations for 8.2%, in the latest downside surprise for a major economy after more than 18 months of central banks cranking interest rates higher.
The BoE now had "the green light" for a 25 basis point (bps) rate rise next month, Pantheon Macroeconomics chief UK economist Samuel Tombs said, after markets had previously priced a further 50 bps hike.
"Profit taking in sterling should not be a surprise," added Kenneth Broux, head of FX and rates corporate research at Societe Generale in London.
The 10-year yield, a benchmark for debt costs in the Euro-zone, fell 5 bps to 2.35% .
Futures trading indicated Wall Street's S&P 500 and Nasdaq 100 share indices would open steady later in the day.
Persons:
Sterling, BoE, Samuel Tombs, Kenneth Broux, Germany's, Klaas, Chris Weston, Sam Holmes, Bernadette Baum
Organizations:
LONDON, Headline, Sterling, . Federal, Bank of England, Macroeconomics, Societe Generale, European Central Bank, ECB, Pepperstone, Nasdaq, Bank of, Thomson
Locations:
SYDNEY, London ., disinflation, Europe, Melbourne