Sterling hit fresh lows against the dollar and the euro on Thursday, as risk sentiment soured after U.S. inflation data cemented bets of aggressive rate hikes by the Federal Reserve.

Analysts also said uncertainty around the British economic outlook and fading rate hikes expectations in the UK would keep the pound capped.

The Sterling fell 0.4% against the dollar to $1.2189, after hitting its lowest since May 2020 at $1.2185.

It rose 0.1% against the euro after falling to its lowest since October 2021 at 86.18 pence.

(Reporting by Stefano Rebaudo, editing by Danilo Masoni) ;))