Sterling rose against the dollar on Thursday, drawing support from expectations the Bank of England could raise interest rates by mid-year and underpinned by a broad dollar weakness. The pound also jumped against the yen, which was sold-off after ratings agency Standard & Poor's cut Japan's sovereign debt rating by one notch to AA minus.
Sterling has found support after minutes of the Bank of England's (BoE) January meeting on Wednesday showed BoE policymaker Martin Weale joined Andrew Sentance in voting for a 25 basis point rate rise from a record low 0.5 percent. Sterling was up 0.26 percent on the day at $1.5939, having climbed to a to a session high of $1.5991 and tripping buy stops following its break through $1.5945 earlier in the session.
It also got a boost after the dollar extended losses after US data showed a rise in the number of Americans making first-time claims for jobless benefits, suggesting continued strains in the labour market. Implied interest rate futures based on overnight index swaps were pricing in a roughly 45 percent chance of a 25 basis point rate rise by May, unchanged from late on Wednesday.
Against the yen, the pound jumped more than 1 percent on the day to a session high of 132.68 yen. The euro was steady on the day at 86.17 pence, having retreated from a 2 1/2-month high of 86.72 pence hit on Wednesday as traders booked profits from the single European currency's rally so far this month.
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