13.08.201404:32:58UTC+00Pound holds 2-day gain before inflation report

The British pound held its two-day gain against the euro as investors awaited the Bank of England’s quarterly Inflation Report for the timing of the interest rate hike.

Sterling was slightly changed at 79.47 pence per euro as of 7:13 a.m. (London time) after it appreciated 0.5% in the last two days. The pound traded at $1.6823 after it fell $1.6757 yesterday, the least since June 11.

BOE Governor Mark Carney will present the report including the central bank’s updated economic projections. In his June speech at Mansion House, Carney mentioned the BOE might increase interest rates earlier than anticipated but he softened his stance.

“The market will be using the Inflation Report to second-guess the timing and extent of U.K. rate hikes. Since his Mansion House speech, Carney may be quite conscious of the power of his hawkishness. We are seeing this come through now as he makes references to not wanting to rock the boat of U.K. recovery.” said Lee McDarby, Executive Director of UK Corporate Foreign-Exchange Sales at Nomura International Plc.