Sterling has dropped in the last 24 hours, as comments from the Bank of England (BoE) indicated growth was being inhibited and speculation on potential rate cuts continued.

This morning the dollar was at 1.7196 to the pound and the euro stood at 1.4706.

The downward trend followed BoE forecasts that economic growth is expected to be in the region of three per cent next year, but will tail off in 2007.

However, the future trajectory of the currency has become a matter of speculation, particularly as analysts are divided on the implications for the interest rate.

Jonathan Said, an economist at the Centre for Economics and Business Research (cebr), believes that the BoE's predictions make an imminent interest rate cut unlikely.

"With consumer borrowing and the housing market holding up well, the chances of a rate cut early in 2006 seem somewhat lower," he said.

However, according to Howard Archer, chief UK economist at analyst Global Insight, the report suggests that the 'hawks' within the rate-setting monetary policy committee (MPC) are losing their influence, making a rate cut more likely.

"This is clearly a more dovish report than the August one, and perhaps significantly it was not offset by any particularly hawkish comments from Mervyn King at the press conference," he said.

Governor Mervyn King, meanwhile, simply says he "remains committed to doing whatever is necessary to keep inflation on track to meet the target in the medium term".