By 1200 GMT, the pound was 0.1% lower against the dollar at $1.203 and 0.1% weaker against the euro as well at 88.15 pence .
Bank of England Monetary Policy Committee member Catherine Mann said that it was too soon to say the risks posed by the surge in inflation last year had eased and the central bank should continue to raise borrowing costs.
"It’s not necessarily the stance that the overall committee is taking, they are looking at the hard data, which at the moment is still quite constructive," said Simon Harvey, head of FX analysis at Monex Europe. "I think a lot of the impact has been softened by the fact that this is nothing new from Catherine Mann." Positive economic signals from a PMI survey earlier this week raised the likelihood of another Bank of England interest rate rise in March, with the market now pricing in a 95% chance of a 25 bps rate hike , after which it is expected to halt hiking rates.
Recent positive economic indicators bring into focus the BoE's tricky task of bringing down inflation while avoiding a deeper downturn in the UK.
“...if the Bank of England does take the rate to 4.5% or above, is that necessarily positive for the currency if all of a sudden it tips the UK economy back into a recession?" said Harvey. The bank rate is currently 4% following 10 increases in a row by the central bank since late 2021. The BoE's next meeting is scheduled for March 23.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Graphic: World FX rates in 2020 Graphic: Trade-weighted sterling since Brexit vote ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Lucy Raitano; Editing by Susan Fenton)
