The dollar rose against the euro on Wednesday as investors awaited Federal Reserve meeting minutes for insight into the central bank's interest rate path, while the pound strengthened on data showing UK inflation fell in April.

Investors have been shoring up U.S. rate cut bets after a milder inflation reading last week, even as Fed officials have continued to sound a cautious note.

Fed Governor Christopher Waller on Tuesday said he would need to see several more months of good inflation data before he would be comfortable supporting rate cuts.

That timeline was echoed by Cleveland Fed President Loretta Mester.

The Fed minutes from its April 30-May 1 meeting due later in the day may reflect more concern about higher-than-expected U.S. inflation in the first quarter, as the meeting was held before last week’s consumer price inflation report.

"I doubt (the minutes) will set the market alight," said Stuart Cole, head macro economist at Equiti Capital in London.

"We have had a pretty consistent message coming out from the Fed since the last meeting that further rate hikes are unlikely, but that cuts will also not be seen until the FOMC is certain that the stronger CPI pressures seen over the first quarter were only noise and that current policy settings are doing their job in curtailing aggregate demand," he said.

"I cannot see these messages proving to be off-script from what the minute will say," Cole said.

While markets remain hopeful that U.S. inflation will continue to cool, personal consumption expenditures data due on May 31 will be a crucial test, analysts said.

The euro was down 0.2% at 1.0836.

The pound was 0.2% higher at $1.2736 following UK inflation data, which did not slow as much as expected but neared the BoE's target in April, prompting investors to pull bets on a rate cut next month.

British consumer prices rose by 2.3% in annual terms in April, slowing from a 3.2% increase in March. The BoE and economists polled by Reuters had forecast an annual rate of 2.1%.

Money markets now see only a 15% chance of a rate cut in June, according to LSEG data. Earlier this week, pricing in derivatives markets suggested traders saw a 55% chance of a first cut coming in June.

Jeremy Stretch, head of G10 FX strategy at CIBC Capital Markets in London, said the inflation data-induced rate repricing looked overdone.

"We would be mindful of GBP rallies proving to be short-lived, as the immediate move in rate cut expectations appears overdone, not least should tomorrow’s flash service PMI reading reveal signs of consumer fatigue," he said.

Elsewhere, the Reserve Bank of New Zealand left its benchmark cash rate at 5.5% as expected, but lifted its forecasts for peak interest rates at its latest monetary policy meeting as inflation stays stubbornly high.

It now sees rates peaking at 5.7% at the end of 2024, compared with 5.6% three months ago.

The New Zealand dollar jumped as high as $0.6152, its highest since March 14. It was last up 0.4% versus the greenback at $0.6112.

Against the yen, the dollar rose 0.2% to 156.53 after data showed Japan's exports rose 8.3% in April from a year earlier.

Fears of currency intervention by Tokyo still had traders on alert after suspected rounds of intervention earlier this month.

In cryptocurrencies, ether eased 1% to $3,702 after jumping 22% over the previous two sessions on speculation about the outcome of applications for U.S. spot exchange-traded funds that would track the world's second-biggest cryptocurrency. Bitcoin was up about flat on the day at $69,881 on Wednesday.

(Reporting by Joice Alves in London and Brigid Riley in Tokyo; Editing by Christina Fincher and Bernadette Baum)