Investing.com - The pound rose to seven-week highs against the dollar on Thursday, as investors awaited the Bank of England’s quarterly inflation report and interest rate decision later in the day.
GBP/USD rose 0.27% to 1.2694, the highest level since December 14.
The BoE was to announce its latest interest rate decision, publish its quarterly inflation report and hold a press conference to discuss the health of the U.K. economy later Thursday.
The pound strengthened amid expectations that the bank will raise its near-term growth and inflation forecasts after figures last week showed that the economy grew by 0.6% in the fourth quarter.
It may also warn that price pressures are building as the weaker pound drives up import costs.
BoE Governor Mark Carney will likely face questions on whether the pickup in inflation is enough to warrant an interest rate hike.
Investors were also watching developments in the U.K. parliament, where the government was to publish its Brexit White Paper, outlining Theresa May’s aims in the upcoming negotiations with the European Union.
Meanwhile, data showed that growth in the U.K. construction sector moderated last month, and the report also pointed to soaring costs.
The Markit U.K. construction purchasing managers' index dropped to 52.2 last month from December’s nine-month high of 54.2. Economists had expected the index to tick down to 53.8.
The survey also showed the steepest rise in costs since August 2008, as sterling's slide since the June Brexit vote pushed up the price of imported raw materials.
A similar survey of the manufacturing sector on Wednesday showed that input costs rose at their fastest rate in 25 years in January.
Sterling was lower against the euro, with EUR/GBP rising 0.19% to 0.8522.