The pound fell back as data this morning showed the UK's annual CPI inflation rate falling back to the Bank of England's 2.0 pct target in December for the first time since June. The news leaves the door open for a further interest rate cut in the months ahead, possibly as soon as next month. "Softer activity and a lower starting point for inflation could see the inflation profile dip a little low for the comfort of some doves on the Monetary Policy Committee, and today's CPI release increases the chance that the BoE might choose to fine-tune rates lower in February," said CALYON analyst Daragh Maher. At 10.04 am, the pound was trading at 1.7614 against the dollar, down from 1.7679 before the figures were released. The euro meanwhile rose to 0.6873 stg from 0.6859 previously. The CPI annual rate has now eased for the third month in a row from the September peak of 2.5 pct. Morevoer, the core CPI rate -- which excludes energy, food, alcohol and tobacco -- fell to a ten-month low of 1.3 pct in December. "Strong competition on the high street and through the supply chain, wage moderation and lacklustre growth are continuing to limit underlying inflationary pressures," said Howard Archer at Global Insight.