Pound steadies as UK inflation cools as expected

The British pound held steady near $1.31, close to the seven-month low reached earlier this month, after fresh data showed a notable easing in UK inflation.

The slowdown offered relief for both the Bank of England and the UK government, while giving Finance Minister Rachel Reeves added momentum as she prepares to deliver a pivotal budget next week.

Headline inflation dropped to 3.6% in October, driven by lower household electricity and heating costs following changes to the Ofgem energy price cap, as well as cheaper hotel prices.

Services inflation eased more than expected, slipping to 4.5%, while core inflation moderated to 3.4%. Reeves has pledged to reduce living costs in her upcoming 26 November tax and spending statement, aiming to steer inflation lower and smooth the path for possible Bank of England interest-rate cuts.

Meanwhile, the US dollar remains supported as investors await September’s key jobs report due on Thursday, keeping broader currency markets cautious.