The pound was firmer after the latest producer price figures out of the UK showed prices continued to rise. Producers' raw material costs, or input prices, rose a higher than expected 1.2 pct in May from the previous month and by 1.1 pct year on year, sparking concerns that while manufacturers may have been unable to push through price hikes for now, they will look to do so soon to boost margins. A potential rise in prices would be another cause for concern on inflation for the Bank of England, supporting the case for higher borrowing costs. The BoE is widely expected to raise rates to 5.75 pct by August, having kept them unchanged at 5.50 pct at its rate setting meeting on Thursday. Global Insight's Howard Archer said the producer price figures "may slightly alleviate the Monetary Policy Committee's concerns that firms are finding it easier to push through price hikes". And, more of a pass through may still be on the cards, he said. "The incentive remains for manufacturers to try to raise prices to boost their margins, and latest survey evidence suggests that they are looking to do this," said Archer. Some analysts see a UK rate hike as soon as next month, but Archer believes this is more likely to happen in August. Elsewhere, the dollar was in demand after the Reserve Bank of New Zealand confirmed had sold its own currency in favour of the US dollar. The central bank said its intervention in the foreign exchange market today was in response to "unjustified" gains in the kiwi dollar. The New Zealand dollar has in recent days risen to its highest levels against the dollar since the currency was freely floated in 1985, and was trading at 0.7632 usd before the intervention. Following the announcement the currency has traded as low as 0.7477 usd. The euro, meanwhile, was steady at lower levels following weaker-than-expected French industrial output figures for April. Output fell 0.8 pct in April from March, after rising 0.2 pct in March from February; analysts had forecast a 0.1 pct rise. "All this seems to confirm that growth in activity is nearing a cyclical peak. This would happen as less friendly international economic conditions are starting to harm a bit of activity in the euro zone, with the US having a marked slowdown in Q1 and the past appreciation in the euro biting exports," said Matthieu Kaiser at BNP Paribas. Later on, the market will pay close attention to European Central Bank President Jean-Claude Trichet's testimony before the European Parliament's Economic and Monetary Affairs Committee in case he reveals anything further on interest rates in the euro zone.