LONDON, May 2 Reuters The British pound slipped against the dollar, having risen the day before after the Federal Reserve39;s policy meeting, while investors were playing down the impact UK local elections on Thursday might have on the currency.

The pound was last down 0.1 against the dollar at 1.2509, having risen 0.3 the day before after Fed Chair Jerome Powell ruled out hiking interest rates, which weighed on the U.S. dollar.

The Fed will be data dependent and if data were to show another boost to inflation then you can39;t completely rule out another rate hike, said Jane Foley, head of forex strategy at Rabobank.

But it does seem the Fed believes the possibility of that is very small right now.

While the Fed signalled that U.S. interest rates would be held at higher levels for longer, investors are looking to the Bank of England39;s meeting next week for clues on when its policy easing could begin.

The BoE is widely expected to keep interest rates unchanged when it announces policy on Thursday, but with inflation slipping back towards target, a rate cut at the following meeting might be put on the table.

We expect the May MPC meeting to set the stage for a June rate cut, Deutsche Bank senior economist Sanjay Raja said in a note.

Elsewhere, analysts were watching the results of local elections taking place in the UK on Thursday, but were not expecting financial markets to take much notice of the results, even with a general election likely before the end of…