The pound stayed resilient today as news that the Bank of England (BoE) may struggle to inhibit inflation emerged.

This morning the dollar was at 1.7525 to the pound, while the euro was at 1.4301 against sterling.

Weakness in the dollar helped the pound hold its position, although it remains down against the euro.

News from accountants BDO Stoy Haward that inflationary levels are likely to rise to 2.3 per cent in the second quarter of 2006 may heighten expectation of interest rate movement by the BoE.

The figure, which is above the government's two per cent target, comes from the firm's latest Business Trends Report.

While a positive picture of the British economy emerged from the last two months, as an upturn in the manufacturing sector and a rise in consumer spending improved the outlook, there were concerns at the prospect of inflationary pressure.

"Businesses may need to err on the side of caution towards the end of the year as this economic upturn is expected to slow into 2007 due to a predicted weaker housing market and sluggish consumer growth," explained Chris Grove, partner at BDO Stoy Haward.