LONDON, June 20 Reuters The pound was little changed on Thursday ahead of a Bank of England BoE interest rate decision in which the central bank is expected to hold borrowing costs at a 16year high of 5.25.

Data on Wednesday showed British inflation fell to 2, hitting the BoE39;s target for the first time since 2021.

Yet stubbornly high services inflation means investors expect the bank39;s monetary policy committee MPC to hold rates until August or September, denying Prime Minister Rishi Sunak a boost ahead of a July 4 national election.

The pound was down marginally on Thursday at 1.2712, but up from a onemonth low of 1.2658 on Friday.

Sterling has been buffeted over the last two weeks by swings in the euro and dollar as investors have digested weaker U.S. inflation data and French President Emmanuel Macron39;s decision to call snap elections.

The euro was down very slightly against the pound on Thursday at 84.42 pence. It dropped to a twoyear low against sterling on Friday as Macron39;s decision rocked markets, but has since recovered somewhat.

Traders think the BoE is most likely to start cutting rates at the September meeting although see a chance of a reduction in August, according to money market pricing.

The probability of the BoE cutting rates as soon as the August MPC meeting has fallen from around 5050 to less than oneinthree after the UK CPI inflation report revealed that services inflation is continuing to prove more sticky than expected, said Lee…