Sterling slipped versus a stronger dollar on Thursday ahead of the Bank of England's policy decision, with no change to rates the widely expected outcome, while investor sentiment remained fragile given the flaring conflict in the Middle East.

The Bank of England is expected to keep interest rates on hold when its policymakers announce their next decision later. The Bank cut the rate to 4.25% in early May, when its Monetary Policy Committee (MPC) also hinted at more reductions to come.

Inflation in the U.K. dropped modestly in May as a drop in air fares and transport costs were largely offset by rising food prices, particularly chocolate.