The Pound fell on Wednesday following lower-than-forecast UK inflation data indicating the Bank of England may not have to hike rates as high as predicted.

Sterling declined as much as 0.8% against the Dollar to $1.2931 and weakened against the Euro as UK inflation declined more than forecast last month, its slowest in over a year at 7.9%.

This was the Pound’s lowest point in a week against the greenback, as it continued to edge down from a 15-month top of $1.3144 last Thursday, Reuters reports.

“Good news at last for UK inflation. Below forecast headline and core,” said Kenneth Broux, head of corporate research FX and rates, at Societe Generale.

“Profit taking in Sterling, as a result, should not be a surprise as we expect Gilt yields to come down vs US Treasuries and Bunds. The Pound was overbought after the run-up in recent weeks.”

In addition, the Euro held steady at $1.1222, moving away from the previous session’s 17-month high of $1.1276. This left the Dollar index marginally stronger at 100.1, rallying from a 15-month low reached in the previous session.

The Dollar halted its sharp fall last week following cooler-than-forecast US inflation leading traders to price in an impending peak in Federal Reserve rates.

Moreover, economists surveyed by Reuters forecast the Fed will announce a 25 basis-point rate rise at this month’s meeting, with the majority of the opinion this will signal an end to the central bank’s current rate hiking cycle.

Additionally, the Dollar reached a one-week high against the Japanese Yen and at the time of writing, was up 0.4% at 139.6, the Reuters report adds. On Tuesday, the governor of the Bank of Japan, Kazuo Ueda, said there was still a way to go to reach the 2% inflation goal, indicating the ultra-loose monetary policy will remain for now.