The pound paused in Thursday trading after its recent rally against the dollar, as traders prepared for a flurry of crucial data next week that could help shore up expectations of a May interest rate hike.
Sterling traded flat at $1.4179 after having earlier hit $1.4223 on Wednesday, its best level since a 19-month high reached in January. Against the euro, the pound was flat at 87.21 pence per euro.
“The pound is pressed up against some key resistance levels,” said Michael Hewson, chief analyst at CMC Markets, noting that sterling was struggling to push past the $1.425 level and against the euro at 86.90 pence.
Data on British unemployment, wages and inflation numbers are due next week.
Markets expect the Bank of England to raise rates next month as it tries to curb inflation, although the probability of a hike happening has fallen to 66 percent from more than 70 percent in previous weeks after some recent British economic data was weaker-than-expected.
Most analysts still expect the bank to increase rates, as Brexit-related risks had subsided for now and wage data still pointed upwards.
“We do not expect the MPC (Monetary Policy Committee) to be swayed by the probable slowdown in real GDP in Q1. Wage data next week will be more important for MPC deliberations and nearly all wage data points to upside risks,” MUFG analysts said in a note.