The pound firmed slightly against the euro as any expectations of further interest rate cuts from the Bank of England diminished following a sharper than expected increase in inflation during July The office for National Statistics revealed that annual CPI inflation in the UK vaulted above the Bank of England's target level of 2.0 pct in July to its highest level since the series began in January 1997 Higher transport costs, fuelled by sky-high oil prices, pushed the annual rate up 2.3 pct in July from 2.0 pct in June, against expectations of a more modest increase to 2.1 pct Geoff Dicks, economist at Royal Bank of Scotland, said the inflation news prompts the question of why the central bank's rate-setting Monetary Policy Committee cut interest rates a quarter point to 4.50 pct earlier this month The news pushed the euro down to around the 0.6810 stg mark from 0.6820 before