Britains pound inches up, but growth fears dominate

　　div classBodysc17zpet90 cdBBJodivpBy Lucy Raitanop

　　pLONDON Reuters – Britains pound inched up against the dollar on Thursday, but stayed clear of recent twoweek highs as soaring inflation combined with a murky growth outlook prevented a stronger rebound.pdivdivdiv classBodysc17zpet90 cdBBJodiv

　　pAt 0850 GMT, sterling was up 0.4 at 1.2395. However, the currency stayed off highs of 1.25 seen earlier this week, having tumbled on Wednesday after data showed UK inflation rising to a 40year record and concerns flared about a sharp economic slowdown given the pain inflicted on consumers. p

　　p“The key debate were having, and the Bank of England is having, is to what extent should they be responding to the pickup in inflation and to what extent the rise in inflation is putting downward pressure on future growth, so limiting the need to tighten policy,” said RBC Capital Markets chief currency strategist Adam Cole. p

　　p“Were kind of on a bit of a knife edge at the moment over which one dominates.”p

　　pAn easing in the safehaven dollar aided the pounds recovery, with the market awaiting British April retail sales data on Friday for fresh direction.p

　　p“The more critical question is what the consumer confidence and retail sales data shows tomorrow, as we get to see how consumers responded to rising prices and the squeeze on incomes that resulted from it,” said Cole. p

　　pStrong labour market data earlier this week had boosted expectations that the Bank of England would have to further increase interest rates, while other data showed that inflation is now running at 9 — well above the BoEs 2 target. p

　　pAgainst the euro, the pound struggled for direction and was little changed at around 84.76 pence.p

　　pPotential changes to the Northern Ireland protocol and the risk of a trade war with the European Union also pose a Brexitrelated risk for sterling, analysts said.p

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　　pp Reporting by Lucy Raitano editing by Dhara Ranasinghe and Susan Fentonp

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