Sterling edged lower following data showing UK inflation eased to 3.6% in October, matching economist forecasts. The currency's modest reaction is attributed to market caution ahead of the UK government's autumn budget scheduled for November 26, according to ING analyst Chris Turner.

"We expect sterling to remain fragile heading into the budget," Turner said in a note. While headline inflation cooled, underlying price pressures persisted as food inflation reaccelerated—a development that some Bank of England policymakers believe could fuel inflation expectations.

Despite these concerns, Turner suggests the data is unlikely to alter the monetary policy outlook significantly, noting that "the central bank looks set to cut rates in December."

In currency markets, sterling fell 0.1% to $1.3135 against the US dollar, while the euro gained 0.1% to 0.8815 pounds.