LONDON, Aug 15 (Reuters) - Sterling fell to a five-week low on Tuesday after July inflation data undershot market expectations, dealing another blow to expectations of a rate increase in the coming months.
The British pound fell 0.4 percent against the dollar to a five-week low of $1.2910 after inflation for July held steady at 2.6 percent on a year-on-year basis compared to a market forecast of 2.7 percent.
Government bond futures spiked momentarily before settling back to their previous level. They were last down 23 ticks on the day at 127.52.
Britain’s FTSE 100 share index extended gains briefly to hit a session high, up 0.3 percent.
Reporting by London Markets team; Editing by Kevin Liffey