The pound hit a 5.5 month high against the euro on Wednesday. This trend is observed after data showing a fall in inflation in major European markets, but it fell against the dollar, as investors were interested in the Bank of England's rate forecasts for the pound's direction.

The euro fell to 86.27 pence, its lowest level since December 15, and last traded down 0.2% to 86.32 pence after inflation data in France and several German states fell short of expectations. This caused European yields to fall and the euro to fall by 0.6% against the dollar, which reached its lowest level in two months.

Against the dollar, the pound was down 0.44% to $1.23585, as the U.S. currency benefited from market nervousness after poor Chinese economic data prompted investors to seek the security of the greenback. The pound was also dragged down in the wake of the euro. The euro lost around 1.5% against the pound in May, which would be the biggest monthly drop since October