UK inflation below target, sterling under pressure

UK consumer prices rose 1.9 percent from a year earlier, down from 2.4 percent in June, the Office for National Statistics said with the rate going well below the Bank of England’s 2 percent target for the first time since March 2006 last month, weakening the case for another interest-rate increase.

The pound fell below $2 for the first time since June 28, falling as low as $1.9994.

The euro hit a six-week low versus the dollar and a four-month low against the yen on a Spanish press report that Santander is facing 2.2 billion euro exposure to high-risk U.S. loans adding to investor concerns about the extent to which European banks are exposed to problems in U.S. credit markets.

The European Central Bank, meanwhile, announced on Tuesday another quick tender, its fourth consecutive operation to supply money markets with sufficient funds and soothe investor concerns of a liquidity freeze.

Data showing a slowdown in euro zone growth to 0.3 percent in the second quarter from 0.7 percent in the first had little impact on the single currency.