The pound came tantalisingly close to $1.30 this morning as investors awaited the Bank of England's Super Thursday tomorrow.
Sterling rose as high as $1.2986 in early trading in London, 0.4 per cent higher, as economists speculated higher inflation could lead the more hawkish members of the Bank's rate-setting monetary policy committee to vote in favour of an interest rate hike.
However, weak economic growth call an abrupt halt to that, Neil Wilson, senior market analyst at ETX Capital, suggested.
"[Inflation] rose to 1.8 per cent in January and since the last BoE meeting we’ve this rise to 2.3 per cent, where it has held for two months.
Growth, on the other hand, has failed to match inflation. GDP growth sank to just 0.3 per cent in the first quarter from 0.7 per cent in the preceding quarter.
"The bank may well scale back its growth forecasts for the year. The data is not particularly supportive of a change in policy, being too lacklustre to warrant tightening but certainly not so weak that further accommodation is required. The Bank is therefore likely to stick to its view that “there are risks in both directions.”