UK inflation dropped to 1.7% in September, its lowest in three years and below the Bank of England's 2% target, prompting a 0.6% fall in the pound. Lower airfares and petrol prices contributed to the decline, which increased the likelihood of further interest rate cuts. Traders now see a 75% chance of two rate cuts before the year's end, following an initial reduction in August. This inflation dip, ahead of the October 30 Budget, provides a potential boost for Chancellor Rachel Reeves as she addresses a £40bn fiscal gap, though it may negatively impact future benefit increases for lower-income families.