Sterling drops to lowest since March after BoE holds rates

LONDON, Sept 21 (Reuters) -

The pound extended losses on Thursday after the Bank of England

held interest rates

steady at 5.25% as inflation slowed more than expected in August.

Sterling was last down 0.65% at $1.2266, its lowest since March, having traded around 0.4% lower at $1.23 before the BoE decision.

Meanwhile, the euro was last 0.48% higher against the pound at 86.77 pence. It traded at around 86.65 pence before the Bank's move, up around 0.3%.

The decision came a day after

data showed

British inflation slowed more than expected in August, coming in at 6.7% year-on-year, down from 6.8% in July. Economists expected a rise to 7%. (Reporting by Harry Robertson; editing by Dhara Ranasinghe)