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British pound dips as BoE chief suggests higher rates

The British pound retreated against the dollar and the euro on Wednesday despite comments from the Bank of England's leader suggesting the need for higher rates.

NEW YORK: The British pound retreated against the dollar and the euro on Wednesday despite comments from the Bank of England's leader suggesting the need for higher rates.

BoE governor Mark Carney told a Glasgow conference that the central bank needs to start raising record-low interest rates in the coming months, even as he emphasised there is no "preset course" for doing so.

"The UK economy has been growing rapidly," Carney said. "As the economy normalises, (the) bank rate will need to start to rise in order to achieve the inflation target."

But Carney added that policy makers have "no preset course and the timing of any increases in interest rates will be determined by the data."

Carney's remarks came as minutes of a July monetary policy meeting showed that policy makers unanimously agreed to keep the bank's key interest rate at an all-time low of 0.50 percent.

Samuel Tombs, senior UK economist at Capital Economics, said the minutes suggested the central bank was moving closer to action. He cited a finding that economic slack was likely being absorbed more quickly, suggesting the economy could withstand higher rates.

But Christopher Vecchio, currency analyst at DailyFX, said the minutes showed an effort "to highlight the weaker aspects of the economy," such as weak wage growth.

"The Bank of England is clearly shifting its bias, but it's also evident it's a long, drawn-out process," Vecchio said.

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