Sterling has recouped its losses from the end of last week making up ground against the euro and US dollar.
A Sunday Times article (which did not cite a source) at the weekend said that the BoE is likely to revise its forecast for inflation over the next 18 months, with the upward pressures failing to subside. This contradicts the BoE previous forecast that inflation would slow to the target level of 2%.
The expectation that Fed chairman Ben Bernanke is to announce another round of quantitative easing is growing, as economic activity slows in the US. This coupled with rising pressure on the BoE to raise rates, could see sterling sail through the $1.60 barrier.
