A surprise easing in UK inflation has handed pound bears a boost, and some analysts see more losses in the pipeline.

Sterling fell to $1.2305 in Asia trading on Thursday, the weakest since April as traders reassessed the odds for another Bank of England rate increase. Commonwealth Bank of Australia says the UK currency may weaken to around $1.2075 while Nomura Holdings Inc. sees a chance of it sliding to $1.18.

“There is now a higher risk the BOE will signal the end of their tightening cycle at its meeting today,” said Carol Kong, strategist at Commonwealth Bank of Australia. “Dovish post‑meeting communication can further weigh on BOE expectations and GBP/USD.”

Another bout of weakness is likely to worsen the pound’s fortunes after the currency declined almost 3% this month to trail all its Group-of-10 peers. Wednesday’s inflation data gave fresh ammunition to pound bears, and spurred the likes of Nomura and Goldman Sachs Group Inc. to reverse calls for a hike.

Traders see the probability of a rate increase at just a coin toss compared with a more than 80% chance a week ago. Some economists expect policymakers to opt for a a “dovish hike” just like the European Central Bank did at its latest decision.

DBS Bank Ltd. is among those who hold that view. While the bank sees BOE tightening by a quarter point, it expects “the pound to depreciate on a dovish hike today,” strategists including Taimur Baig wrote in a note.

“Remain short GBP/USD to 1.22, with markets likely to consider looking at the 1.18 levels set in March, perhaps,” Jordan Rochester, currency strategist at Nomura, wrote in a note.

--With assistance from Matthew Burgess.