Investing.com - The pound rose to two-week highs against the euro on Wednesday, amid expectations that a rate hike by the Federal Reserve in the coming months would prompt the Bank of England to follow suit.
EUR/GBP was down 0.43% to 0.6962 from 0.6989 late Tuesday.
The greenback has been bolstered by expectations that the Fed will hike rates as early as September.
On Tuesday, comments by a Fed official fueled expectations for a September liftoff.
Atlanta Fed President Dennis Lockhart said it would take a “significant deterioration in the economic picture” for him to not support a rate hike in September.
Investors were turning their attention to the upcoming U.S. jobs report for July, due out on Friday, which could reinforce expectations for higher interest rates.
Meanwhile, the Bank of England was announce its latest interest rate decision; publish the minutes of the monetary policy meeting and present the latest quarterly forecasts for economic growth and inflation on Thursday.
The three events had been held separately previously.
The bank was expected to reiterate that policy tightening is on the horizon.
Sterling rose to session highs against the dollar, with GBP/USD up 0.30% to 1.5609 from 1.5576 earlier.
The pound shrugged off data showing that growth in the U.K. service sector slowed more than expected last month, indicating that the economic recovery may be losing momentum.
The Markit U.K. services purchasing managers' index fell to 57.4 in July from 58.5 in June, compared to expectations for a reading of 58.0.
Hiring in the sector eased to its slowest pace since March 2014, the report said.
Taken together with surveys of the manufacturing and construction sector earlier this week reading points to economic growth of 0.6% in the third quarter, Markit said, down slightly from 0.7% in the three months to June.
The euro was at two-week lows against the dollar, with EUR/USD easing 0.11% to 1.0868.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was at 98.13.