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Sterling is hit by drop in inflation

STERLING has fallen to fresh four-month lows against the dollar, with news of a sharp fall in annual UK inflation viewed as easing the pressure on the Bank of England to raise base rates, writes Ian McConnell.

Figures published yesterday by the Office for National Statistics showed annual UK consumer prices index inflation fell more steeply than expected, from 1.9 per cent in June to 1.6 per cent in July. This took it further below the target set for the Bank by the Treasury. A sharp fall in clothing prices played a part.

Sterling was trading at $1.6619 at 5pm, having hit an intra-day low of $1.6609. It closed at $1.6720 on Monday.

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