Sterling inches higher before BoE report

— Sterling inched higher against the dollar on Tuesday ahead of the Bank of England’s Financial Stability Report, looked to for moves to cool areas of credit that might help policymakers hold off for longer with any rise in interest rates.

The defection by several Monetary Policy Committee officials to the camp supporting a rise in base interest rates has given the pound some support in the past week.

On the one hand, reinstating the 0.5 per cent of risk-weighted assets banks are asked to hold as a buffer against shocks to consumer finances would be a sign of confidence in an economy which has looked to be slowing.

But it might also take any unwanted steam out of loan growth which could be cited as one reason for raising rates.

Sterling inched 0.2 per cent higher to $1.2742 in morning trade in London, but was 0.4 per cent weaker against a euro boosted by comments from ECB chief Mario Draghi.