In contrast to sterling, which reached 15-month highs after data on wage growth fuelled hopes that the Bank of England (BoE) still has room to raise rates, the dollar tumbled to the lowest level in 2 months on Wednesday ahead of a critical report on U.S. inflation.

Investors were intensely focused on the U.S. inflation data that was scheduled to be released later on Wednesday. They anticipated that core consumer prices would have increased 5% annually in June. The data might indicate how much farther the Federal Reserve might increase interest rates.

The greenback underperformed a basket of currencies prior to the publication, falling to a two-month low versus the Japanese yen, which increased over 140 yen to the dollar for the first time in a month.

EUR/USD added 0.2% to $1.1027 inching at the highest level in 2 months.

GBP/USD reached a 15-month high of $1.2970 on hopes that the BoE would announce additional rate increases to control UK inflation, which is currently running at the highest pace of any major economy.

USD/JPY slipped to the lowest level in one month by 0.76% at 139.32.