The British Pound Just Got Whacked

The British pound dropped to $1.664 from around $1.671 moments ago.

The move followed a new inflation report that showed UK consumer prices fell by 0.3% month-over-month in July, which was worse than the -0.2% expect. On a year-over-year basis, CPI climbed by just 1.6% year-over-year, missing expectations for 1.8% growth.

"Disinflationary tailwinds from sterling appreciation should push down on the headline rate in months to come," wrote Bloomberg economists Jamie Murray, Niraj Shah and David Powell. "In this environment, it would take a sustained burst of above-trend wage growth for inflation to gain significant traction - an unlikely prospect."

The cooler than expected inflation levels gives the Bank of England more flexibility to keep monetary policy loose and interest rates lower for longer, all things being equal.

Here's a look at the intraday move via Bloomberg.com.