BoE keeps rates on hold pending economy's performance in 2H2018

Weak economic data leaves less than 10 per cent chance of interest rate rise

Now investors want to see if Carney keeps market bets on an August hike alive at a news conference after the 1100 GMT rate announcement, or if he decides that sitting on the fence is a safer strategy.

On Friday the currency rose 0.1 percent versus the dollar at $1.3533 and increased 0.1 percent against the euro at 88.090 pence.

The pound recovered somewhat on Thursday after Bank of England Governor Mark Carney told the BBC that he expected a rate rise over the course of the next year if there were no shocks to the economy.

"The UK economy seems rather fickle at present (and) even the Bank of England seems to be blowing hot and cold", said Hetal Mehta, an economist at Legal & General Investment Management.

Britain's economy grew more slowly than most of its peers past year, after a Brexit-driven jump in inflation hit consumer spending power and some businesses delayed long-term investment.

The preliminary estimate of the U.K.'s GDP growth in the first quarter was 0.1 percent, 0.3 percentage points lower than expected in February, the bank said.

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Overall, he said, the BoE was sticking to its message that rates would probably need to rise - for only the second time in over a decade - once that recovery was clear.

The BoE also left the Bank Rate unchanged at 0.5 percent, with only two out of nine rate-setting Monetary Policy Committee (MPC) members voted for a rise, with the two minority-view members being external appointees Ian McCafferty and Michael Saunders, with the BoE's six staff all voting for no rise.

Carney said data looked "mixed" and hinted at MPC disagreements. On the other hand, the BoE revised down its inflation forecasts both in the short and medium term, while reducing growth this year by 40bps.

And while Brexit-fuelled inflation has fallen sharper than expected in recent months, the Bank said rate hikes would still be needed over the next three years, with cost pressures building in the economy.

Rate futures showed less than a 50 percent chance of a hike in August, the next time the BoE updates its forecasts.

But with growth slowing, the central bank could struggle to raise rates at all this year, he added.

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