Sterling rallied against the dollar on Thursday after new measures to cool the UK housing market failed to dampen rate rise expectations and a downward revision to U.S. GDP continued to weigh on the greenback.
The Bank of England tightened lending norms to the housing sector but its measures were less aggressive than many in the market had anticipated. That kept expectations for an interest rate rise as soon as by the end of this year intact.
The British pound rallied to a day's high against the dollar of $1.7036 after the BoE released its Financial Stability Report—not far off a six-year high of $1.7064 touched last week— from around $1.7010 beforehand.
The dollar index languished near one-month lows in the wake of data, on Wednesday, showing a sharp contraction in U.S. gross domestic product in the first quarter, which suggested the Federal Reserve would be in no hurry to raise interest rates.