Sterling firmed slightly versus the dollar on Thursday, regaining some poise after sharp falls from this week's 14-year peaks prompted by uncertainty over Britain's monetary policy outlook.
Minutes from the Bank of England's last rate-setting meeting, released on Wednesday, showed only five of the Monetary Policy Committee's nine members voted for this month's surprise interest rate hike to 5.25 percent - a much closer outcome than the 7-2 split expected by the market.
Coupled with comments late on Tuesday from BoE Governor Mervyn King that early action against high inflation may avoid the need for bigger rate rises later, the minutes cast some doubt on the scope of further monetary tightening.
"I think we are certainly in a period of consolidation, and people are going to wait and see much more in terms of the outlook for UK interest rates," Chris Gothard, currency analyst at Brown Brothers Harriman said.
By 1511 GMT, sterling was up 0.1 percent on the day at $1.9703 - having tumbled from this week's 14-year peak of $1.9917 - the highest since the currency was forced out of the European Union's Exchange Rate Mechanism (ERM) in 1992.
Wednesday's fall appeared to put the tantalising $2 level out of the pound's reach for now. The euro was flat on the day at 65.86 having hit a 4-year low earlier this week at 65.34. The pound had also retreated from 14-year highs hit against the low-yielding yen this week.
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