The pound dipped on recent highs in the last 24 hours as the likelihood of an imminent rate rise was downplayed.

The dollar stood at 1.7763 against sterling, while the euro was at 1.4703 to the British currency this morning.

Comments from Bank of England governor Mervyn King to a government select committee again emphasised that the British economy would begin to enter a period of inhibited growth but reiterated the MPC's main concern was controlling inflation rather than tinkering with growth.

Mr King explained to the House of Lords Economic Affairs Committee: "I think a number of people in the last six months have been talking as if the [interest rate setting] MPC targets demand, or even more oddly, retail sales and consumer spending. We are not. We are trying to target inflation."

He added: "The idea that the MPC can fine-tune the economy and can in fact ensure that the economy grow at some fixed rate every quarter is absolutely imaginary.

"It's important that people understand what we can do, but also what we can't do."

Meanwhile, in the US, indications that the economy was riding out high energy prices appeared to be undermined by new economic data on consumer confidence.

Figures released by the Conference Board research group showed that confidence was at its lowest for nearly two years - with the index charting at 85.0, well down on September's 87.5.