Investing.com - The pound remained supported close to seven-week highs against the dollar on Wednesday, bolstered by expectations that an increase in inflation will prompt the Bank of England to raise interest rates in the coming months.
Sterling was up 0.12% to 1.5680 against the dollar, not far from the seven-week high of 1.5716 set on Tuesday. It was steady near one-week highs against the euro at 0.7045.
The pound rallied after data on Tuesday showed that the consumer price index edged up 0.1% in July from zero the month before, compared to expectations for no change.
Underlying inflation, which excludes volatile items, such as energy and food, rose to 1.2% from 0.8% in June, the fastest for five months.
UK inflation is still well below the BoE’s 2% target, having hovered around zero since February. In April inflation fell into negative territory for the first time in half a century, down 0.1% from a year earlier.
The pound was boosted by the higher-than-expected core inflation figure as well as comments from outgoing BoE policymaker David Miles who said Tuesday that a rate hike is coming "pretty soon".
Investors were looking ahead to the latest U.S. inflation data and the minutes of the Federal Reserve’s latest meeting later on Wednesday for indications on the timing of a rate hike.
An uptick in consumer prices would reinforce expectations higher interest rates.
Market watchers were also hoping that the minutes of the Fed’s July meeting would provide more clarity on its plans to hike short-term interest rates for the first time since 2006.
The US dollar index, which tracks the greenback against a basket of six major rivals, was steady at 96.98.