By John Beresford-Peirse and James Amott
London, July 4 (Bloomberg) -- The British pound, which has lost 5.8 percent against the dollar this year, was little changed amid expectations the Bank of England's Monetary Policy Committee won't lower interest rates tomorrow.
With inflation and house prices rising, and unemployment at the lowest rate since 1975, a rate cut tomorrow is unlikely, analysts said. None of the 28 economists surveyed by Bloomberg News expect the U.K.'s central bank to lower its refinancing rate from 5.25 percent this week.
``This is the first time for a while that the market won't be watching for a rate cut,'' said Joanne Collins, an economist at Daiwa SBCM Europe. The decision will be ``neutral for the (currency) market.''
The pound was trading at $1.4038, compared with $1.4061 yesterday. Against the single currency, it was at 60.21 pence per euro from 60.20. Sterling has gained 4.8 percent against the euro since the start of the year.
In another sign of strength in the U.K. economy, the Chartered Institute of Purchasing and Supply said its monthly service industry index rose to 52.1 in June from 52 in the previous month. That's the 28th successive months of gains, the employers' group said.
The benchmark U.K. rate compares with 4.5 percent in the 12 nations sharing the euro and 3.75 percent in the U.S. Higher rates in the U.K. can boost sterling as investors are attracted to superior returns on short-term deposits.
The pound may gain ground against the euro tomorrow if the European Central Bank lowers interest rates, said Daiwa's Collins. She expects the central bank to lower its key rate by 25 basis points.
U.K. house prices figures today from Halifax Group Plc, Britain's largest mortgage lender, showed a rise of 1.6 percent in June from May, or an annual increase of 9.7 percent. That reinforced yesterday's Nationwide Building Society report showing U.K. house prices rose at the fastest pace since January. Nationwide is the country's fourth-largest mortgage lender.
The pound was little changed after a report showed U.K. retail sales growth slowed in June.
Fifty-five percent of retailers said sales rose and 25 percent said they fell, according to a survey by the Confederation of British Industry. The balance of 30 percent seeing stronger sales was lower than May's reading of 35 percent and below expectations for a balance of 34 percent.