SINGAPORE, Dec 21 Reuters Sterling crosses nursed losses on Thursday, while the yen found a footing in holidaythinned trade ahead of the last major data release of the year in Friday39;s U.S. inflation figures.

Sterling suffered its sharpest drop on the dollar in two months on Wednesday after British inflation dived below forecasts to an annual 3.9 in October, a twoyear low.

The currency fell 0.7 to 1.2638 as traders priced in Bank of England rate cuts as soon as May. Subsequent moves in Thursday39;s Asia session were modest and it last bought 1.2639.

Against the euro the pound hit its weakest in more than three weeks at 86.68 pence and it last traded near that level at 86.59. The Aussie hovered at 0.5334, after hitting a sixmonth top of 0.5355.

Analysts forecast a similar easing for Friday39;s U.S. core personal consumption expenditure PCE data, with the annual inflation rate seen slowing to its lowest since 2021 at 3.3.

But given the dollar has been on the back foot for weeks and 150 basis points of Federal Reserve cuts are already priced in for 2024, caution held off any further dollar selling, for now.

Some adjustments in positions and paring back of risks ahead of this event…is only sensible, said OCBC currency strategist Christopher Wong in Singapore.

Liquidity is getting thinner as we get closer to the festive season, thin liquidity can exacerbate price movements on any data surprises.

Heavy selling in the final hour of equities trade on Wall Street had…