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Sterling near three-year lows before price data

LONDON (Reuters) – The pound was close to nearly three years on Wednesday ahead of July inflation data, with concerns about a Brexit deal without a deal.

Against the dollarGBP= D3>, the pound was stable at $ 1,2056, slightly above the $ 1.2015 hit on Monday, the weakest since the October 2016 flash crash.

Against the EuroEURGBP= D3>, the British currency was weaker at 92.725 pence.

Inflation data for July are expected to show a slight decline with expectations of 1.9% for the year to July period.

While easing price pressures, along with solid wage data on Monday, may be a sign that the economy is in a state of relief, analysts say the Bank of England is unlikely to take a stable stance given concerns over Brexit.

"Their main concern is Brexit and there is no chance they will raise rates as the government goes tirelessly towards national suicide, so the figure is probably neutral to the pound," said Marshal Gittler, chief strategist at ACLS.

Currently, money markets give a 60% chance of a quarter point drop by the end of December, compared to 68% on Tuesday.

Compassion for the pound has been hit, as some investors have used their Brexit expectations without a deal, while others expect increased political uncertainty in the coming months.

Prime Minister Boris Nonson, who took office last month, has pledged to leave the European Union on 31 October with or without an agreement on Britain's terms of departure. The EU has so far said it will not negotiate the deal reached by its predecessor, Theresa May, but has rejected the British parliament.

(Reporting by Saikat Chatterjee; Editing by Andrew Kautner)

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