LONDON: Sterling fell against the dollar on Wednesday as the US currency strengthened on the back of rising Treasury yields, while traders remained cautious ahead of British GDP numbers due on Friday.
The economic growth release will be the last key data released before the Bank of England's Monetary Policy Committee meeting early next month, and markets are split over whether the central bank will raise interest rates.
Governor Mark Carney dashed confidence that a rate hike would happen when he said last week economic data in Britain was "mixed" and that there were several other MPC meetings later this year.
That sent sterling plummeting from post-Brexit vote highs and left it down for the month of April.
The pound, however, had snapped its losing streak and risen on Tuesday and overnight on news of a potentially positive M&A deal, RBC analysts said in a note.
But with the dollar rebounding on Wednesday, investors sold the pound.
"The price action today reflects more dollar strength than sterling weakness," Morten Helt, an FX strategist at Danske Bank said.
Helt said that despite Carney's comments, he still expected the BoE to hike rates as it followed the US Federal Reserve in tightening policy and as it looked at a strong labour market and the potential for that to put upward pressure on inflation.
"We will have to see a very weak print (of GDP data on Friday) to delay a rate hike. We still believe in a rate hike and see sterling supported in the next few weeks."
The pound fell 0.2 percent to $1.3948 as the dollar gained across most major currencies.
Sterling remains more than four cents off its post-Brexit vote highs of $1.4377 hit last week.
Against the euro, which some analysts say is currently a better gauge of demand for pounds given there has been considerable dollar-specific news this week, sterling gained 0.1 percent to 87.425 pence per euro.
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