Sterling hit as BoE warns of deflationary impact of strong pound

The Bank of England's Monetary Policy Committee has warned ongoing sterling strength could prompt a prolonged period of lower inflation expectations.

In minutes for March's meeting, the MPC said strong economic performance in the UK, coupled with the European Central Bank's bond buying programme, is having upward pressure on the sterling. It added that these "divergent monetary policy trends" could continue to drive the pound higher. The members said: "This had the potential to prolong the period for which inflation would remain below the target and exacerbate the risk that lower expectations of inflation might become persistent." Sterling has recently climbed to its highest level for six years, rising 2.5% so far in March again...