LONDON: Sterling rose against the dollar on Tuesday after robust data, with investors' focus on testimony by Bank of England Governor Mark Carney on monetary policy and the economic outlook.
Carney, along with other BoE policymakers, faces questions from a parliamentary committee on this month's BoE quarterly Inflation Report at 1000 GMT.
Investors will be looking to see whether the BoE backs up expectations that UK interest rates will rise earlier than market participants had previously thought, possibly in 2015.
A survey overnight showed British service sector firms were hiring new staff at the fastest rate in six years and were planning to ramp up investment. This added to a string of recent strong UK data and followed figures on Monday showing mortgage approvals up 33 percent year-on-year.
Sterling was up 0.2 percent at $1.6190, edging near a one-month peak of $1.6241 hit on Monday and the early October high of $1.6260.
"If you look at the major currencies, sterling is the most reliable," said Nawaz Ali, market analyst at Western Union Business Solutions.
"It is running into technical resistance ... But right now you can't short sterling."
The outlook for UK monetary policy is more favourable for the currency than in other major countries. U.S. stimulus looks unlikely to be scaled back before next year, while further easing measures are expected in the euro zone and Japan.
However, analysts said Carney may emphasise that a recent drop in inflation could reduce the need for tighter policy. Wariness about this kept sterling pinned below key chart levels against the dollar and the euro.
Sterling fell slightly to 83.72 pence per euro.
It was expected to face stiff resistance at 83.33 pence, equivalent to 1.20 euros per pound and a level at which UK importers often look to sell sterling, and at the early November peak of 83.00 pence.
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