Pound notes
Sterling off multi-week high ahead of CPI dataReuters/Catherine Benson

Sterling is trading below the the multi-week high it fetched against the dollar last week as the market is bracing for data which is forecast to show consumer price inflation continued to fall at the start of the year.

The Greek rejection of the EU/IMF bailout plan has also boosted the dollar via the euro weakness, in turn weighing on the UK currency as well.

At 2.30 GMT, the GBP/USD traded at 1.5368, off the 16 February high of 1.5442, which was its highest since 2 January. The UK prices data including consumer, producer and retail price indices, will be released later.

The UK currency had been up in the first two weeks of this month and was boosted by the BoE inflation report that raised the growth and inflation projections for the economy.

The consensus is for the headline year-on-year CPI rate to decline to 0.3% from 0.5% in December and the monthly rate to show deflation of -0.8% from 0% in the previous month.

The PPI deflation is seen deepening to -12.2% from -10.7%. The year-on-year retail price inflation is seen easing to 1.3% from 1.6% and the monthly rate dipping to negative.

Talks between the Eurogroup and Greece over the country's debt broke down on 16 February when Athens rejected a proposal to request a six-month extension of its international bailout, increasing the odds that the debt-laden country would soon be forced to quit the single currency region.

Eurogroup President Jeroen Dijsselbloem said Greece had time until 20 February to request an extension, otherwise the €240bn bailout will expire on 28 February.

The EUR/USD fell 0.45% on 16 February following the Greek decision even though the market is still keeping a view that something could work out in favour of the region before the deadline. Additional negative surprise from the region will easily take the pair through the 1.1097 support, the 26 January low, exposing levels like 1.0761 and then the parity level.

The German and eurozone ZEW survey for January and Greek CPI data will also be released later in the day.