Sterling on the rise ahead of Bank of England's interest rate announcement

Sterling has been creeping up in morning trading, ahead of the Bank of England's latest decision on whether to hike interest rates.

Though the Bank's monetary policy committee (MPC) is widely expected to hold interest rates at 0.5 per cent, analysts are predicting that policymakers' tone will be hawkish and may set the stage for a rate rise in May.

This pushed sterling up as high as $1.418 in early trading, thought the pound had settled slightly at the time of writing to hover up around 0.06 per cent against the dollar. Sterling was also up around 0.1 per cent against the euro.

One investment bank, MUFG, even went so far as to say that the Bank of England could hike interest rates today – despite concerns over lacklustre inflation rates and only marginal wage growth.

Lee Hardman, the bank's currencies analyst, said there was an "outside chance that a hike could be delivered as soon as today", though a 65-strong Reuters survey all concluded that this would not be the case.

Hardman said indications of a tightening labour market and rising inflation, and the easing of government's austerity measures, could be the developments that the Bank needs.

City A.M.'s shadow monetary policy committee (MPC) also predicted a rate hike would be deferred today, though there was one dissent.

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