The British pound held steady near $1.31, remaining close to the seven-month low reached earlier this month, following fresh data showing a notable easing in UK inflation. The slowdown offered relief for both the Bank of England and the UK government, while giving Finance Minister Rachel Reeves added momentum as she prepares to deliver a pivotal budget next week.

Headline inflation dropped to 3.6% in October, driven by lower household electricity and heating costs following changes to the Ofgem energy price cap, along with cheaper hotel prices. Underlying measures also showed improvement, with services inflation easing more than expected to 4.5% and core inflation moderating to 3.4%.

Reeves has pledged to reduce living costs in her upcoming November 26 tax and spending statement, aiming to steer inflation lower and smooth the path for possible Bank of England interest-rate cuts.

Meanwhile, the US dollar remains supported as investors await September's key jobs report due on Thursday, keeping broader currency markets in a cautious stance.