The pound has edged off recent highs

Emma Haslett
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Traders have been encouraged by rate hike hints in last week's Bank of England minutes (Source: Getty)

The pound has edged lower after it rose to a fresh high against the dollar in the early hours of this morning, as hints dropped by the Bank of England continued to encourage traders.

Sterling rose to $1.3619 in the wee hours, having hit $1.3617 on Friday - before settling around $1.3563, 0.2 per cent down on the day. It also dipped against the euro, falling 0.1 per cent to €1.1359.

The rise came after the Bank of England's monetary policy committee committee (MPC) dropped heavy hints about an imminent interest rate hike last week. Thus, all eyes will be on governor Mark Carney this afternoon as he delivers a speech at the IMF in Washington, analysts suggested.

"Carney... is sure to be scrutinised for further hints," said Mike van Dulken and Henry Croft at Accendo Markets.

"Thereafter it’s likely all about the US Federal Reserve’s mid-week policy update. Despite a jump in US inflation, markets do not expect a knee-jerk hike. Not without evidence of a sustained improvement. Obsession with the timing of the next US rate hike will, however, remain very much in evidence. Expect speculation to heighten both into and out of the scheduled press conference."

Meanwhile, after taking a battering last week following surprisingly strong UK inflation, the FTSE 100 reversed some of its losses, edging 0.4 per cent higher to 7,242 points. Engineers GKN, BAE Systems and Johnson Matthey pulled the index higher, rising 2.8 per cent, 2.7 per cent and 1.8 per cent respectively.

Read more: Do rising interest rates reduce returns on income investments?

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