Pound falls the most in a month, UK inflation weaker than expected.

The pound suffered its biggest single-day drop in a month, as UK's inflation rate was weaker than expected, increasing market speculation that the Bank of England may have to further cut interest rates next year. The pound fell by over 0.8% against the US dollar to 1.3312, hitting its lowest level in a week; UK 10-year bond yields fell by over 7 basis points to 4.45%. Currency markets increased their bets on a rate cut by the Bank of England, expecting a reduction of 67 basis points by the end of next year, up from 58 basis points before the inflation data was released. Forex traders familiar with the market revealed that hedge funds sold off the pound against the euro and the US dollar in the spot market after the above-mentioned data was published.