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The pound was up at $1.6087 by 12:00 GMT as the possibility of near-term quantitative easing by the BoE reduced.
Michael Hewson, analyst at CMC Markets, said: "The inflation outlook is set to remain firmly tilted to the upside in the near term, making a resumption of further easing fraught with difficulty in the near term."
Ian Stannard, senior currency strategist at BNP Paribas, pointed out that sterling rebounded after the upward revision of the consumer price index predictions and he advised that any increases in the pound around the $1.61 mark should provide a selling opportunity.
This comes after the UK tender hit a six-week high against the euro yesterday as the single currency dropped to 85.90 pence.
Posted by Chris Weaver
