Sterling steadied near an earlier one-week high against the dollar and a recent 3-week high versus the euro on Friday after strong UK economic data this week heightened chances of an interest rate rise this year.
In the absence of fresh economic data on Friday, sterling maintained this week's gains with investors looking to see if the minutes of the Bank of England's latest meeting due next week could suggest policymakers might be leaning towards an interest rate hike. "Cable is expected to lead the European currency rebound against the dollar... The BoE minutes will be the focus. A hawkish spilt can be expected given that data have come in strong and inflation has exceeded the BoE's 2 percent target," BNP Paribas said in a note to clients.
By 1355 GMT the pound was steady at $1.8501 after hitting a one-week high of $1.8555 earlier.
Against the euro, it was also unchanged at 68.28 pence having hit a 3-week high of 68.15 pence on Thursday.
On Friday, British retailer John Lewis Partnership said department store sales were up just 4.6 percent year-on-year in the week to June 10, down from double-digit gains seen in many recent weeks, as hot weather and the soccer World Cup kept people out of the shops.
Some analysts are cautious about pricing in an early interest rate hike.
"Our expectations are the MPC will remain on hold throughout the year, early next. We think that retail sales will slow into the later part of the year. There is no significant pressure on wage growth. There is a hold/hike bias," said David Simmonds, head of foreign exchange strategy at Royal Bank of Scotland.
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