Sterling rose in European trade on Friday against a basket of major rivals, extending gains for the second straight day against the dollar away from recent two-week lows and after hot UK growth data.

The data hurt the odds of early UK interest rate cuts in June, as investors now await important inflation and wages data this month.

The Price

GBP/USD rose 0.15% to $1.2541, with a session-low at $12512, after closing up 0.2% on Thursday, the first profit in three days away from two-week lows at $1.2446.

Earlier weak US unemployment claims data dragged the dollar down against major rivals this week.

The BOE

As expected, the Bank of England maintained interest rates unchanged today at 5.25%, the highest in 15 years, for the sixth meeting in a row.

The BOE said the members need to see more evidence that inflation is heading towards 2% before voting in favor of cutting interest rates.

Bailey

BOE Governor Andrew Bailey said at his post meeting press conference that the bank hasnt yet reached the point of cutting interest rates, as such a step requires inflation to steadily approach the 2% in upcoming months.

He said that a June interest rate cut isnt ruled out but it isnt realistic.

BOE Forecasts

The BOE expects UK inflation to hit 2% in the second quarter of the year, before rising to 2.6% within a year.

UK Rates

Right now, the odds of a June BOE interest rate cut stood at 50%.

Hot Growth Data

Earlier London data showed the GDP grew 0.6% in the first quarter, passing estimates of a 0.4% growth rate, and after a 0.3% contraction in the previous quarter.

UK Capital Economics' chief economist Roth Gregory said the UK economy remains somewhat weak, but all early signs indicate the GDP growth will be strong in April.

She believes that under such data, the BOE isnt in any rush to cut interest rates.