Sterling heads into second week of dollar gains
Sterling was heading towards a second consecutive week of gains on the dollar as continuing concerns about inflation boosted predictions of further rate rises.
The pound was worth $1.8915 in early Friday trading compared to $1.88 last Friday and the euro exchange was trading 67.15p against 66.98p a week ago.
The UK consumer price inflation index rose at the fastest rate in the nine years that it has been in use this quarter, new economic figures have revealed.
The news that new mortgage approvals rose last month also encouraged sterling to appreciate, as it appeared that homebuyers were not put off by interest rate rises.
Chancellor Gordon Brown said this week that the government will "take no risks" with inflation as he revealed better than expected growth figures.
The cautionary note was echoed by Bank of England chief economist Charles Bean who called on policy makers to actively curb inflationary pressures.