The pound dipped this morning after new figures from the Office of National Statistics (ONS) suggested that inflation was below expectations.

The dollar stood at 1.7824 against the pound while the euro was at 1.4436 against sterling.

Consumer Price Index annual inflation fell to 1.8 per cent in March, as the transport sector enacted a downward effect.

Other contributors to the trend included computer game prices and digital camcorders, while the largest downward effect on the CPI annual rate came from food and non-alcoholic beverages.

Analysts responded to the news with surprise, as the inflation rate proved much softer than most had anticipated.

Low inflation rates have hardened speculation among some that the interest rate will be scaled down in the short-term by the Bank of England.