Sterling stabilised against the euro and dollar on Friday, with markets focused on the UK interest rate outlook in the absence of major UK data.
Investors were looking back to weaker than expected March inflation data released on Thursday and its possible implications for UK interest rates, and forward to data on growth, retail sales and the housing market due next week.
The inflation data took sterling down from 7-month highs against the dollar hit earlier in the week on upbeat comments on inflation in the minutes of the Bank of England's April meeting.
"There are some upside pressures to inflation but they have not fed through yet, with the weak inflation data we had this week," said Audrey Childe-Freeman, European economist at CIBC World Markets. "I am bearish on sterling."
By 1412 GMT, sterling was steady against the dollar at $1.7794, over a cent below Wednesday's 7-month high of $1.7935. Sterling was also steady at 69.20 pence, within recent ranges.
Markets are increasingly doubtful that the next move in UK interest rates will be a rise from the current 4.5 percent. Prospects of a cut in British rates are particularly negative for sterling when other major central banks are tightening monetary policy or are expected to start doing so soon.
However, some analysts said that British inflation could yet pick up in the coming months as oil prices continue to set record highs.
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