The Pound slipped on Wednesday as the US Dollar strengthened against major currencies, reversing earlier losses triggered by investor concerns over the Federal Reserve’s independence, while markets also absorbed the latest UK producer price inflation figures.

The British currency fell 0.33% to $1.3434, underperforming the Euro, which dropped 0.5% to $1.1584.

The Dollar had initially softened on Tuesday after US President Donald Trump moved to remove Fed Governor Lisa Cook over alleged mortgage loan irregularities, but the effect was short-lived. The greenback was last up 0.3% at 98.6 against a basket of major currencies, Reuters reports.

For the month, Sterling is on track to finish roughly 1.5% higher against the greenback, supported by a reduction in expectations for Bank of England rate cuts and strong economic data.

“A more persistent hold on Bank Rate is appropriate right now, to maintain the tight - but not tighter - monetary policy stance needed to lean against inflation persistence persisting,” said Bank of England Monetary Policy Committee member Catherine Mann within statements published by the BoE on Tuesday.

British producer price inflation climbed to a two-year high of 1.9% year-on-year in June, according to preliminary official figures released on Wednesday.

The producer price data follows a consumer inflation report showing that UK CPI reached an 18-month high of 3.8% in July. Money markets currently assign roughly a 40% probability of a Bank of England rate cut before year-end.

Furthermore, against the Euro, Sterling’s risk profile leans toward gains, with short-term momentum supported by the market’s hawkish adjustment of Bank of England rate expectations, according to Francesco Pesole, FX strategist at ING.

“In GBP/USD, we still think a structural break above 1.35 is a matter of when rather than if,” he said.

On Tuesday, the Pound edged slightly higher against the Euro, trading at 86.22 pence per Euro.