London stocks slipped on Wednesday as slower-than-expected deceleration in Britain's inflation knocked off hopes of a June interest rate cut, while Marks & Spencer's gains after the retailer reported an upbeat annual profit tempered losses.

As of 07:07 GMT, the benchmark FTSE 100 index fell 0.6%, while the pound strengthened against the dollar and touched a two-month high at $1.27425.

The mid-cap FTSE 250 dropped 0.4% to 20,693.65.

British consumer prices (CPI) rose 2.3% in April, slowing from a 3.2% increase in March, while economists polled by Reuters expected a 2.1% rise.

Markets are now pegging a mere 16% chance of a June rate cut by the Bank of England, a dip from the nearly 60% that was priced in last week. Despite UK inflation edging closer to the BOE's target, its sluggish deceleration fell short of expectations, casting a pall over investor sentiment.

Markets also have Nvidia's quarterly results on the radar that is due later in the day, and could spark a $200 billion swing in the AI-darling's shares.

Keeping losses at check, Marks & Spencer jumped 7.4% after the retailer reported a 58% rise in annual profit and was ahead of market expectations.

SSE fell 2.3%, after the power generator and network operator posted a lower annual adjusted operating profit. (Reporting by Pranav Kashyap in Bengaluru; Editing by Rashmi Aich)