By Joice Alves
LONDON (Reuters) - The pound rose against a weakening dollar on Friday and was set for the biggest weekly gain in almost four months, after the Bank of England (BoE) held interest rates at a 15-year high and stressed that it did not intend to cut them any time soon.
Sterling picked up ground against the dollar also after data showing U.S. job growth slowed more than expected in October as strikes by the United Auto Workers (UAW) union against Detroit's "Big Three" car makers depressed manufacturing payrolls, while wage inflation cooled, pointing to an easing in labour market conditions. [FRX/]
Sterling surged 1% to $1.2327, its highest level in three weeks, putting it on course for its biggest weekly gain since mid July.
Against the strengthening euro, the pound edged 0.13 higher at 86.92 pence.
The BoE left borrowing costs unchanged at 5.25% this week and published forecasts showing the British economy was likely to skirt close to a recession and flat-line in the coming years.
The latest projections of the Monetary Policy Committee (MPC), which voted 6-3 to keep the Bank Rate on hold, indicate that monetary policy is likely to need to be restrictive for an extended period of time, the BoE said.
BoE Governor Andrew Bailey also said interest rates would probably need to stay high for some time to tackle inflation.
"BoE left the Bank Rate unchanged yesterday in line with expectations. We still think BoE is already done with rate hikes as GDP growth is set to slow down and the unemployment rate could continue to edge higher," said Antti Ilvonen, analyst at Danske Bank.
"Governor Bailey tried to push back against markets pricing in rate cuts for next year."
A survey indicated on Friday that Britain's services businesses suffered a loss of momentum for a third month in a row in October, adding to signs the economy is making a weak finish to 2023 as high interest rates and cost of living pressures weigh on demand.
British finance minister Jeremy Hunt said on Friday that the government would carry on working with the BoE over the central bank's sales of its massive bond-buying purchases, which represent a big cost for the government.