Sterling rose on Thursday to a two-month high as the dollar resumed its decline a day after the US Federal Reserve disappointed the market by giving no hint on when it would start raising interest rates.
That helped offset comments from Bank of England policymakers which caused markets to slightly pare expectations of early interest rate rises, a move that would normally be negative for the pound. Governor Mervyn King said the BoE wanted to avoid a marked economic slowdown that might pull the inflation rate below target.
At 1403 GMT, sterling was up 0.5 percent versus the dollar at $1.9849, having earlier risen as high as $1.9896 - a level last seen in early May. The euro slipped 0.1 percent to 79.20 pence, off a one-week high of 79.50 pence set earlier, while the pound gained 0.3 percent to 93.2 on the BoE's trade-weighted basis.
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