The pound continued to slide lower in the European session after UK inflation data showed a third consecutive decline in January.
Data from the Office for National Statistics (ONS) revealed the annual consumer price index (CPI) rose 10.1% last month, down from 10.5% previously and beating expectations for a 10.3% rise.
Although decreasing, the readings recorded are still 'likely' to go down to single digits.
Meanwhile, the reading of core inflation (excluding food and energy prices) decreased to 5.8% year-on-year in January from 6.3% seen in December.
Monthly figures showed UK consumer prices fell 0.6% last month compared to expectations for a 0.4% decline and a 0.4% rise previously.
Earlier, Bank of England (BOE) Governor Andrew Bailey predicted inflation would fall sharply this year following lower energy prices and an economy headed for recession.
The market has now lowered its expectation of an interest rate hike to 4.55% by September from 4.70% previously.
The pound's initial reaction saw the currency slip lower to around 1.2071 against the USD immediately after the release.
