Sterling hit its highest in nearly three months against the dollar on Wednesday and rose versus the euro after slightly hawkish minutes from the Bank of England's April meeting cemented expectations for steady interest rates.
As expected, Monetary Policy Committee members voted 7-1 to leave rates steady at 4.5 percent. Stephen Nickell called for a 25 basis point cut for the fifth month running, but members thought there had been little news since the March meeting with economic growth continuing steadily.
Most MPC members still saw upside risks to prices stemming from higher energy costs and noted that people's inflation expectations had picked up in recent surveys and would need to be monitored carefully.
"The BoE will stay on hold for the time being. Given that it is not cutting rates, this allows sterling to track a broader dollar story," said Marios Maratheftis, currency strategist at Standard Chartered.
"The fact that they didn't comment explicitly on the consumer sector makes the minutes slightly more hawkish, but it doesn't really change the outlook on interest rates."
By 1425 GMT, the pound had risen 0.3 percent at $1.7898, its highest since late January. Against the euro it was up half a percent at 68.92 pence, largely driven by a falling euro/dollar.
The dollar earlier came under broad pressure on concerns that US interest rates might be close to a peak. On Thursday, UK consumer prices data for March is due.
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