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It reached a six-week high against the euro in forex trading on Wednesday (May 11th) after the Bank raised its inflation forecasts.
Speaking to Reuters, currency strategist at UBS Chris Walker urged caution regarding the pound's gains, warning that the currency is still playing "catch-up" in relation to the changed interest rate expectations since the start of 2011.
"The market was positioned quite short going into it, expecting a more dovish tone from the BoE and that's the main reason sterling rallied," he told the news provider.
In its inflation report, the Bank raised its short-term inflation outlook, which could mean the organisation increases the base rate in the country despite its current sluggish economic activity.
The pound gained 0.8 per cent on the euro and 0.6 per cent on the dollar following the publication of the document, Bloomberg noted.
Posted by Chris Weaver
