The pound jumped backed to gains for the day while investors sold UK government bonds after the Bank of England revealed it had come close to raising interest rates at its May meeting.
The BoE kept interest rates on hold as economists had expected, but three members of the monetary policy committee voted for a change as concerns rise about inflation.
At publication time, the pound was up 0.2 per cent against the dollar to $1.2780, despite a wider strengthening in the dollar index. Sterling had trading at about $1.27 ahead of the news.
Yields on the government’s benchmark 10-year gilts, meanwhile, rose 7 basis points (0.07 percentage points) to 0.994 per cent. Yields fall when prices rise.