Trading in the pound was little affected by the Bank of England's decision yesterday to leave the UK base rate at 5.75 per cent.

Sterling rose to 2.0357 from 2.0280 against the dollar, while it climbed slightly against the euro to 67.31 pence from 67.26.

Traders are expecting at least one more interest rate rise in the UK before the end of 2007, but many said yesterday's decision to freeze them came as no surprise.

Economist Lena Komileva told the Financial Times: "Severe flooding in the last two months and escalating volatility in equity markets all argued for steady rates this month."

However, she added: "The latest consumer inflation expectations and producer pricing power gauges together with stronger-than-expected gross domestic product will maintain a hawkish bias on the MPC."

Analysts expect a further rate rise this year because inflation is still riding at more than two per cent in Britain, in excess of Bank of England targets.