Today's data "probably doesn't change the market's uncertainty with regard to the monetary-policy decision," said Derek Halpenny, European head of currency research at Bank of Tokyo in London. "The markets are infinitely more convinced with regard to the European Central Bank next week than the Bank of England in May. That's the catalyst for euro-sterling."

The pound was little changed at 88.12 pence per euro as of 12:11 p.m. in London. It earlier today reached 88.36 pence, the weakest level since Oct. 26. It was down 0.1 percent to $1.5972 and advanced 0.5 percent to 131.24 yen.

The ECB and Bank of England both meet next on April 7. All but one of the 19 economists surveyed by Bloomberg forecast euro-area policy makers will raise rates, whereas no change is expected for the U.K. central bank.

Among other data released today, the current-account deficit widened to 10.5 billion pounds ($16.8 billion). A measure of M4 money-supply growth that the U.K. central bank uses to assess the effectiveness of its asset purchases slowed to an annualized 0.5 percent in the three months through February from 3.2 percent in January.

Eoin Treacy's view The severity of the weather, the VAT increase earlier this quarter and higher energy and food prices have all acted as a brake on the UK's still fragile domestic economic growth. The Bank of England appears willing, at least temporarily, to tolerate higher headline inflation and has so far demurred from raising short-term interest rates. This is at least in part because it fears deflation more than inflation and because there is little it can do about food and energy prices.

The UK government earned significant investor goodwill when its fiscal tightening was announced last year. This is evidenced in 10-year Gilt yields which have been ranging below 4% since late 2008 and found support near 3.5% last week. A sustained move below that level would be required to question scope for some additional higher to lateral ranging, while a break above 4% would be needed to suggest heightened inflationary concerns.

Inflation-linked 10-year yields have been ranging below 1% since late 2009, having experienced significant compression since late 2008. However, compared to Gilts, the spread of 300 basis points is only marginally above the 13-year median. Since 1997, significant moves above 300 basis points have coincided with inflation scares. These charts suggest that while inflation is a mounting issue, it is not yet at a level where investors are seriously concerned about the value of their holdings.

The UK demonstrated from late 2007 that it was more than willing to allow the Pound to take the brunt of the economy's travails. The currency hit a medium-term low against the Euro in late 2008 and has sustained a progression of higher reaction lows since. It has returned to retest that sequence over the last month and will need to hold above €1.11 if medium-term recovery potential is to remain on course.