(Reuters) – The pound was on track for its biggest one-day gain in almost two weeks on Wednesday after data showed British core inflation stayed strong in July, while the yuan slipped to a nine-month trough as concerns mounted about a deepening growth slowdown.

The yen floundered inside a key intervention zone that kept traders on guard, while the New Zealand dollar was supported after the central bank slightly pushed out when it expects to start cutting borrowing costs.

The pound was last up around 0.3% at $1.2747, set for its biggest one-day jump since Aug. 7.

Core inflation in Britain, which strips out volatile energy and food prices, remained at 6.9% in July, flat versus the June reading, and higher than expectations in a Reuters poll for a reading of 6.8%.

With inflation still running far above the Bank of England’s 2% target, chances are that the central bank has further to go in raising rates even at the risk of hurting growth, analysts said.

“Core inflation and services inflation are too high. It all indicates that the Bank of England will have to move rates higher in September,” said Niels Christensen, chief analyst at Nordea.

“I’m surprised it (sterling) hasn’t gained more ground. (The market is) locked between hike expectations supporting sterling and fear of a weaker economy weighing on sterling.”

CHINA WORRIES MOUNT

In Asia, the yuan tumbled to its lowest level since November in both the onshore and offshore markets, falling as low as 7.2989 per dollar, and hitting a trough of 7.3379, respectively.

That extended Tuesday’s decline following a slew of Chinese data that missed forecasts and prompted Beijing to deliver unexpected cuts to its key policy rates as authorities there raced to shore up an economy that has rapidly lost steam in recent months.

The Chinese gloom initially saw the Australian dollar, often used as a liquid proxy for the yuan, plumbing nine-month lows.

“Seeing is believing. The markets still want to see much more tangible evidence of not just monetary, but fiscal support coming through to revive growth (in China),” said Ray Attrill, head of FX strategy at National Australia Bank (OTC:NABZY).

“Until they see any evidence of that, they’re still going to take the view that not enough is being done or that China isn’t sufficiently serious about bolstering growth to really bring about a meaningful shift in sentiment,” he said, adding he expected downward pressure on the Australian dollar to persist for now.

The New Zealand dollar, which had also fallen to a nine-month low of $0.5932 in early Asian trade, rebounded after the Reserve Bank of New Zealand policy meeting, to trade higher by 0.6% at $0.5984.

The central bank held its cash rate steady as expected on Wednesday, but slightly pushed out when it expects to start cutting borrowing costs to 2025.

“The statement gave a clearly more hawkish tone, likely defying any dovish expectations,” said Barclays (LON:BARC) research analyst Shreya Sodhani.

“We think today’s more hawkish statement and the governor’s press conference suggest that the timing of rate cuts will likely be pushed back a bit.”

The dollar index was off 0.2% at 103.02, though it was not far from an over one-month peak hit on Monday, thanks to higher bond yields in the wake of upbeat U.S. data. The euro gained 0.2% to $1.0924.

Elsewhere, a sliding yen also kept traders on intervention watch, with the currency having hit the key 145 per dollar level for four sessions now, a zone which triggered heavy dollar selling by Japanese authorities in September and October last year.

“Markets are concerned whether the Bank of Japan will intervene or whether dollar-yen needs to go all the way up to 150,” Nordea’s Christensen said.

“They have not been so loud in the last week but the threat of intervention is why the market has been a little bit hesitant to push dollar-yen up.”

Policymakers have not been as vociferous as they have been last year in their rhetoric against defending a weakening yen, with Finance Minister Shunichi Suzuki saying on Tuesday that authorities are not targeting absolute currency levels for intervention.