LONDON: Sterling hit a four-week low against the euro on Wednesday after weak UK inflation data raised the possibility of more monetary easing, leaving investors cautious before Bank of England minutes. The pound could recover if the minutes, due at 0830 GMT, show BoE governor Mervyn King dropped his call for quantitative easing at this month's meeting, especially given his more upbeat tone when he presented the banks' Inflation Report last week. It would also benefit if UK retail sales and government borrowing numbers for April, due at the same time, reveal an improvement, in line with recent data that has pointed to a modest pick-up in UK economic activity. But investors remained wary that incoming BoE governor Mark Carney, who takes up his post on July 1, may be more inclined to take additional steps to aid an economic recovery. The euro rose 0.3 percent to 85.43 pence, its strongest since April 23, holding above chart support at the 55-day and 200-week moving averages around 85.17 pence. The pound was down 0.1 percent at $1.5143, trading close to a seven-week low of $1.5113 hit on Tuesday after data showed British inflation slowed much more than expected to 2.4 percent in April. "Sterling may able to recover if the minutes show King jumped ship ... but the fact that we don't know what approach Carney will take is an uncertainty," said Richard Driver, analyst at Caxton FX. Still, he expected the pound to fall towards $1.50, which has been firmer recently on speculation that the U.S. Federal Reserve could scale back its asset-purchasing programme. Traders were cautious, however, before testimony from Federal Reserve Chairman Ben Bernanke later on Wednesday and after two regional Fed presidents hinted that the central bank would continue its bond-buying. The International Monetary Fund is due to publish its annual review of Britain's economy later on Wednesday. It is expected to include a call for more measures to support growth.

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