FOREX-Dollar steady, sterling squeezed as focus turns to U.S. inflation

LONDON, Dec 21 (Reuters) – The dollar was steady while sterling crosses nursed losses on Thursday in holiday-thinned trade ahead of the last major data release of the year in Friday’s U.S. inflation figures. Sterling suffered its sharpest drop on the dollar in two months on Wednesday after British inflation dived below forecasts to an annual 3.9% in October, a two-year low. The currency fell 0.7% to $1.2638 as traders priced in Bank of England rate cuts as soon as May. On Thursday it hit a one-week low of $1.2618. Against the euro the pound hit its weakest in more than three weeks at 86.78 pence. Analysts forecast a similar easing for Friday’s U.S. core personal consumption expenditure (PCE) data,…