LONDON, June 21 (Reuters - The pound seesawed on Wednesday, initially jumping after data showed UK inflation accelerated more than expected in May, but then reversing gains, as concerns flared over the Bank of England's ability to protect the economy from stagnating.
Sterling was last flat against the dollar at $1.2763, having traded at $1.2764 before the data. Against the euro, the pound was also broadly unchanged on the day at 85.47 pence, compared with 85.50 pence right before the numbers.
Official data showed consumer inflation rose by 8.7% year on year in May, showing no change from April's 8.7% rate, but above expectations for an increase of 8.4%.
But the core rate, which excludes food, energy, alcohol and tobacco, rose by 7.1%, above expectations for a reading of 6.8%,
keeping the BoE under pressure to deliver a big rate rise when it meets later this week, but not so large it tilts the economy into recession.
(Reporting by Amanda Cooper; Editing by Andrew Heavens)
