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Dollar weakens after recent highs

Sterling rose on this morning against the dollar which weakened against other majors. Investors focused on economic data that could help the pound recover after the Bank of England last week held rates and cut its growth projections.

The rally in the dollar lost momentum after tame U.S. inflation data tempered expectations for a faster pace of rate hikes by the Fed.

The Fed raised rates in March and projected two more rate hikes this year, although many investors had seen three hikes as possible.

On Thursday the BoE held interest rates steady as expected but cut its growth and inflation projections for this year and next, sending sterling to a four-month low against the dollar.

The decision left traders unsure about whether the central bank will hike rates at all this year.

Market expectations of a rate hike in August are currently below 50 percent compared to nearly 60 percent at the start of last week.

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