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Sterling spiked Tuesday as U.K. consumer price inflation came in higher than expected in February.
The pound was up 0.78% at $1.2456 at 06:00 ET after an intraday low of $1.2340.
Official data showed the CPI rose 0.7% month-on-month last month and 2.3% year-on-year, up from 1.8% in January.
The CPI was forecast to rise 0.5% month-on-month and 2.1% year-on-year.
The Bank of England has indicated a certain tolerance toward inflation rising above its target of 2%.
The BoE forecasts consumer price inflation to peak at around 2.75% in early 2018.
The BoE last week voted to keep monetary policy on hold, with the base rate at a record low of 0.25%.
However, one member of the monetary policy committee voted for a 25 basis-point hike at the meeting.
Britain is set to invoke Article 50 of the Lisbon Treaty on March 29 on its departure from the European Union.
The dollar index was off 0.40% at 99.76, near six-week lows.
The pound was up 0.78% at $1.2456 at 06:00 ET after an intraday low of $1.2340.
Official data showed the CPI rose 0.7% month-on-month last month and 2.3% year-on-year, up from 1.8% in January.
The CPI was forecast to rise 0.5% month-on-month and 2.1% year-on-year.
The Bank of England has indicated a certain tolerance toward inflation rising above its target of 2%.
The BoE forecasts consumer price inflation to peak at around 2.75% in early 2018.
The BoE last week voted to keep monetary policy on hold, with the base rate at a record low of 0.25%.
However, one member of the monetary policy committee voted for a 25 basis-point hike at the meeting.
Britain is set to invoke Article 50 of the Lisbon Treaty on March 29 on its departure from the European Union.
The dollar index was off 0.40% at 99.76, near six-week lows.
