Sterling hopped one percent higher on the day against the dollar on Tuesday after strong data on UK mortgage lending, retail sales and the manufacturing sector left little room to doubt a Bank of England rate hike this Thursday. Analysts said that although some of sterling's strength came from a broad retreat in the U.S. currency, the pound's resilience versus the euro proved the numbers were giving it a boost. The Bank of England Monetary Policy Committee (MPC) is expected to add a quarter point to its official interest rates this week, bringing them to 4.25 percent as the British economy grows soundly. "The strong numbers are certainly helping. All were strong and if anyone had any doubts going into the MPC meeting, they were dispelled by that," said Lee Ferridge, head of global currency strategy at Rabobank in London. "A fair bit of cable (sterling/dollar) strength is linked to the broad dollar weakness but euro/sterling is also stable so sterling is finding strength of its own." At 1120 GMT sterling traded at $1.7882 , a fraction below the day's peak of $1.7916. It was also roughly steady on the day versus the euro at 67.43 pence .
RATE DIRECTION
The dollar took a beating on Tuesday as investors grew jittery ahead of a U.S. interest rate decision later in the day, fretting that expectations of imminent Federal Reserve interest rate hikes may have been overdone. But there were few question about the British MPC's decision after UK retail data from Confederation of British Industry (CBI) showed sales steaming ahead in April. The CBI said the percentage difference between firms reporting sales from the year before and those experiencing declines surged to +30 last month form just +17 in March. Meanwhile, mortgage lending rose at a record pace in March, suggesting the last two BoE rate hikes did little to dampen consumer' voracious appetite for debt. Some MPC members are worried about rising consumer debt and housing prices. Britain's manufacturing sector also showed much strength, as the Chartered Institute of Purchasing and Supply/ purchasing managers' index (PMI) rose to 55.1 in April, compared to 53.8 in March month and the consensus forecast fo 54.0. "We had an extremely strong PMI survey and that triggered buying," said Adrian Hughes, currency strategist at HSBC in London. "Historically, sterling is very quiet in the rate-decision week so if you get strong numbers like that spot moves can be erratic."///