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Bank of England Monetary Policy Committee minutes are set to be published tomorrow, after governor Mervyn King had to write another letter to the chancellor this morning explaining why inflation is more than one percentage point above the target of two per cent.
Despite a slight dip, inflation has now been higher than the three per cent mark for seven consecutive months.
Duncan Higgins, senior analyst at Caxton FX, believes the minutes will reiterate Mr King's stance that inflation does not pose a major threat, a point he has already "made clear".
"With the economic outlook still highly uncertain, the Bank is no mood to tighten monetary policy, which the market now appears to have factored in," Mr Higgins added.
The single currency had been strengthened by high demand at an auction of Irish bonds that took place today.
Posted by Clive Arneil
