The pound fell 0.25% to hit its highest level of 83.15 pence against the euro since March 23, 0835 GMT.
“The pound has managed to recover some of the ground lost against the euro in recent sessions. This is largely due to the softer tone of the euro, however,” said Jane Foley, head of FX strategy at Rabobank London. .
“The single currency is more exposed to energy security concerns than the pound, but in addition there is some nervousness in the market ahead of the first round of French elections this weekend,” she added.
Eurosceptic and far-right French candidate Marine Le Pen, who is closing in on President Emmanuel Macron in the polls, added another threat to the euro.
After hitting a three-week low the previous day against the US dollar, the pound rose slightly by 0.12% to $1.3085.
Mr Foley said there were “few signs of the pound advancing significantly against the dollar, the latter having been boosted this week by a further strengthening of the Fed’s hawkish stance”.
Minutes of the meetings showed that Federal Reserve officials saw steep rate hikes as appropriate in future meetings, especially if inflationary pressures build.
European Central Bank minutes due later today are not expected to be as decisive as the Fed’s. [FRX/]
Analysts will be closely watching the speech by the Bank of England’s chief economist, Huw Pill, also scheduled for later in the day.
Markets expect the BoE to raise rates by 133 basis points this year. [IRPR]
ING said it sees those expectations adjusting south in the second half of the year.
“Given high inflation which is going to rise, he may not want to put out a rate protest today,” ING analysts told their clients, referring to Pill.