LONDON, Dec 14Reuters Sterling held steady against the euro on Wednesday, after data showed UK inflation eased from a 41year high in the runup to the Bank of England39;s next rate decision due later this week.

Against the dollar, the pound edged up 0.24 to 1.2395, as traders prepared for the Federal Reserve39;s upcoming decision on U.S. interest rates.

Official consumer prices data on Wednesday showed UK inflation falling more sharply than expected in November to 10.7 from October39;s 41year high of 11.1.

The picture is still consistent with what the Bank of England BoE told us when they last met, which was that the peak in inflation would probably be around 11 in October, said Adam Cole, head of FX strategy at RBC Capital Markets.

Sterling was virtually flat versus the euro at 85.985 pence.

Economists polled by Reuters had forecast that the inflation rate would slip to 10.9. Both U.S. and euro zone inflation, too, have dropped more steeply than expected last month, raising hopes that the current wave of inflation may have peaked.

The market is looking ahead to the BoE39;s interest rate decision on Thursday, with traders placing a 70 chance of a 50 basis points bps increase to the bank rate .

The question is how the BoE responds tomorrow, said Cole. What markets will be looking at is, if we get the 50 bps hike that is expected, how much dissent there was around that?

British policymakers have been hiking rates since late 2021 to try to bring down doubledigit…