Sterling is tipped to head into a fifth day of advances against the dollar on expectations that the Bank of England (BoE) will continue to raise borrowing costs into 2007.

The pound rose to $1.9137 in early trading from $1.9139 late yesterday and stood at 67.59p against the euro, from 67.54p.

The UK currency enjoyed the highest rise in three months against the dollar yesterday following notes issued by the BoE's monetary policy committee voted seven to two in favour of higher interest rates earlier this month.

"The market is still looking for rate increases," Tom Vosa of National Australia Bank and a former BoE economist told Bloomberg.

The notes suggested "that even at five per cent, some committee members may want policy to be more restrictive," he added.

Analyst Lehman Brothers Holdings raised its rate forecast to 5.25 per cent by February, followed by a fall to five per cent in February 2008.