A raft of price data from the U.K. on Tuesday included news that the headline inflation rate had unexpectedly held steady at 0.6% in August, defying expectations for a small uptick.

Analysts had assumed a weaker pound - which has fallen 10.5% against the dollar since just before the Brexit vote - would fan inflation as it pushes up manufacturers' input costs. Those surged in August, but not quite as fast as expected. On the month consumer prices rose by 0.3%, instead of the 0.4% anticipated.

"We didn't see the uptick that we were expecting but the trend is still edging higher and the depreciation in the pound is undoubtedly going to have an inflationary impact further down the road," said Craig Erlman, senior market analyst at Oanda.

The Office for National Statistics showed producers' input prices rose 7.6% on the year and 0.2% on the month, after growth of 4.1% and 3.1%, respectively, in July.

"Input prices isn't just a cost that is going to be absorbed by the companies - some of it will fall on the workers. We're going to see cost cutting in other areas of the business," said Erlam.

In its report the ONS said consumer price growth was led by food and airfares, with hotel prices dropping and the decline in the price of motor fuels narrowing from a year ago. The prices of alcohol, and clothing and footwear rose less than a year ago.

The ONS' producer price bulletin showed factory gate prices - the prices manufacturers charge for their products - rose by 0.8% on the year after 0.3% growth in July. That was slightly less than the 1.1% annual rise expected.

Separate data from the ONS on house prices showed 8.3% growth in U.K. house prices in the year to July, down from 9.7% a month earlier.

The weaker-than-expected headline inflation could arguably give the Bank of England more room to maneuver after its quarter-point cut on Aug. 4, and although inflationary pressures are mounting price growth remains well under its 2% target.

But Oanda's Erlam said the generally better-than-expected economic data from the U.K. published in recent weeks means the Bank of England will probably wait until next year to ease once more, especially after criticism from lawmakers and others that it acted too hastily after the Brexit vote in cutting rates and boosting bond buying.

The pound had extended early losses against the dollar by mid-morning and was recently down 0.32% at $1.3291.

The yield on 10-year U.K. government bonds was recently down 3 basis points at 0.83%.

The FTSE 100 was recently down 0.15% at 6,690.79.