LONDON: Sterling edged up on Tuesday against a broadly weaker dollar but was unlikely to hold its gains, with the Bank of England expected to pledge to keep interest rates low.
Analysts said British inflation data for June due at 0830 GMT had the potential to push the pound higher if the annual figure came in above the 3.0 percent forecast.
Some strategists said a number above 3.0 percent could marginally dampen the prospects of aggressive easing.
Sterling was up 0.1 percent at $1.5110, far above a three-year low of $1.4818 hit on July 9. Initial chart support was cited at Monday's low of $1.5028. A reported options expiry at $1.5120 could keep the currency pinned to that level.
"In today's inflation data that 3 percent level is psychologically important and anything higher than that could push sterling up," said Kathleen Brooks, research director at FOREX.com.
Some analysts said that while the pound could inch higher, this would be a selling opportunity before Wednesday's minutes of the BoE's latest Monetary Policy Committee meeting.
"While sterling could well spike initially higher on the data today...(that is) likely to be followed by a dovish set of BoE minutes. We would look to use rebounds into the $1.53 area to re-establish bearish sterling/dollar positions," analysts at Morgan Stanley said.
Traders said the minutes would be a step towards preparing investors for a pledge to keep rates low until an economic recovery is under way. The guidance is widely expected to be released in early August in the Quarterly Inflation Report.
The euro, was up 0.1 percent at 86.59 pence, off a four-month high of 86.945 pence.
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