Sterling edged towards a recent 8-month high versus the euro and rose against a broadly firmer dollar on Friday, taking direction from moves in other major currencies in a session with no key British economic data.
Sterling came off this week's two-year high on a trade weighted basis the previous day after British police said they foiled a plot to blow up transatlantic flights. But analysts say underlying support remains for the pound, which rallied after a surprise Bank of England rate hike last week.
"It seems there is interest to buy euros and sterling," said Neil Parker, currency strategist at Royal Bank of Scotland.
"We had an interest rate rise and the inflation report, and people are generally more willing to buy sterling because they see a further interest rate hike in the pipeline."
In its inflation report the BoE signalled interest rates may need to rise a bit further to keep inflation in check.
By 1420 GMT the pound was up 0.4 percent against the euro at 67.29 pence, and stood at $1.8950 up slightly on the day. Sterling hit a fresh 8-year high of 220.14 yen. On the trade-weighted index, sterling briefly hit a one-week low before recovering.
Next week will be crucial in shaping up BoE rate expectations. The minutes of the central bank's latest meeting, consumer price data, a house price survey and an employment report are due.
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