Investing.com - The pound slid to session lows against the broadly stronger dollar on Tuesday despite data showing that the U.K. exited negative inflation last month as concerns over Greece and the upcoming Federal Reserve policy statement clouded market sentiment.
GBP/USD was down 0.22% to 1.5559 from around 1.5610 ahead of the inflation report.
The Office for National Statistics said the annual rate of consumer inflation ticked up 0.1% in May, in line with forecasts, following a 0.1% decline in April.
Consumer prices were up 0.2% from a month earlier, also in line with forecasts.
Underlying inflation, which strips out food and fuel costs rose 0.9% last month, slightly below forecasts for an increase of 1.0%.
The report also showed that U.K. house price growth slowed sharply last month, hit by uncertainty ahead of the general election and tax changes in Scotland.
The house price index rose just 5.5% in April the ONS said, below forecasts for a gain of 10.2% and down from 9.6% in March.
Bank of England Governor Mark Carney has said that inflation is likely to pick up in the coming months after briefly dipping into negative territory in April.
Demand for the dollar continued to be underpinned by mounting concerns over the prospect of a Greek default and exit from the euro zone after negotiations on a cash-for-reforms deal broke down over the weekend.
Investors were looking ahead to a meeting of euro group finance ministers on Thursday, but chances for a deal receded after Greek Finance Minister Yanis Varoufakis said Tuesday he won’t present a new reform plan at the meeting.
Sterling was slightly lower against the euro, with EUR/GBP at 0.7240.
Investors remained cautious ahead of Wednesday’s Federal Reserve monetary policy statement, which would be closely watched for any indications on the timing of rate hikes.
Recent stronger economic reports, including on jobs growth and retail sales have boosted expectations that the Fed may start to hike rates at its September meeting.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.19% to 95.25.