Sterling climbed towards 2006 highs against the euro after Bank of England (BoE) minutes and strong UK mortgage data were published yesterday.

This morning Sterling stood at €1.4892, $1.8932 and 221.5900 yen as expectations for a November interest rate rise remain high.

The BoE Monetary Policy voted 8-0 in favour of maintaining rates at 4.75 per cent in September, suggesting a rise is likely in November.

Jonathan Loynes, chief European economist at Capital Economics, said: "The minutes of the September Monetary Policy Committee meeting did little to alter the prospects of another rise in interest rates to five per cent in November. As expected, the committee voted 8-0 to leave rates unchanged this month.

"But it noted several times that the markets expect another hike in rates before the end of this year and did nothing to suggest that this expectation will not be met."   

Meanwhile, gross mortgage lending hit new record levels last month, according to the Council of Mortgage Lenders (CML).

Lending increased 7.2 per cent in August from the month before to total £32.7 billion, with growth predicted to continue over the next few months.

Howard Archer, chief UK and European economist of Global Insight, said: "August's increase in interest rates has added to the affordability pressures already stemming from moderate earnings growth, soaring utility prices and the marked overall renewed firming in house prices in recent months, and it currently looks likely that the Bank of England will raise interest rates by a further .25 basis points in November."