The British pound edged lower in European trading on Friday against a basket of global currencies, extending its negative streak for the sixth consecutive session against the US dollar and nearing a weekly loss as selling pressure persisted following recent UK economic data.

This weeks data showed that UK inflation remained unchanged in September, defying expectations and easing concerns about entrenched inflationary pressures among Bank of England policymakers a development that strengthens the likelihood of an interest rate cut before the end of the year.

Price overview

Todays exchange rate: The pound fell 0.1% to $1.3317, down from an opening of $1.3325, after hitting a session high of $1.3332.

On Thursday, the pound lost 0.2% against the dollar its fifth straight daily decline and touched a two-week low of $1.3306 on Wednesday after the UK consumer price data release.

Weekly performance

Over the course of the week, which officially concludes with Fridays settlement, the pound has fallen more than 0.8% against the US dollar, on track for its second weekly loss in the past three weeks.

UK inflation

The Office for National Statistics reported on Wednesday that headline inflation in the United Kingdom rose 3.8% year over year in September, below market expectations of a 4.0% increase and matching Augusts pace.

Core inflation rose 3.5% in September, also below forecasts of 3.7% and slightly down from 3.6% in August.

The stabilization of overall inflation, coupled with the slowdown in core inflation, has eased concerns about entrenched price pressures and may prompt the Bank of England to resume monetary easing and cut rates before year-end.

UK interest rates

Following the data, market pricing for a 25-basis-point rate cut by the Bank of England in its November meeting rose from 40% to 50%.

To reassess these expectations, investors are closely watching key UK data releases later today, including September retail sales and October manufacturing and services performance indicators.

Pound outlook

At Economies.com, we expect that if upcoming UK data come in weaker than expected, market bets on a rate cut before the end of the year will increase likely pushing the pound further lower against major global currencies.