LONDON (Reuters) - Sterling bounced off one-week lows on Wednesday after Bank of England policymakers struck a hawkish tone on inflation and interest rates in testimony to parliament.
The pound had earlier been knocked lower by data showing an unexpected tick-up in the jobless rate, and by news that more than 60 Conservative lawmakers had written to the prime minister demanding a quick, clean break from the European Union.
But having traded as low as $1.3905 after the labour market data, sterling recovered to trade flat on the day at around $1.3990, after BoE policymaker Andy Haldane said there was a chance rates would need to rise faster than the central bank’s central view, and Governor Mark Carney said wage pressures were firming.
The 10-year gilt yield pared losses by around a basis point as Carney and other policymakers spoke, leaving it at 1.56 percent at 1521 GMT - down around 2 basis points on the day.
Reporting by Jemima Kelly and Andy Bruce; editing by Sujata Rao