The after-effects of the Bank of England’s quarterly inflation report continued to buoy sterling against the euro, pushing the UK currency to a six-week high against the single European currency.

The report, which revealed that the BoE expected inflation to remain high in 2011, was taken to mean that, for now at least, QE by the central bank was off the agenda. Former Bank official David Tinsley, now an economist at National Australia Bank, said that the report was a ‘sea-change relative to the pre-recession reports that we’ve had’, and that whereas other reports had been more dovish in their views on the economy, this one opted for a hawkish approach. Also taking this view was Credit Suisse, which said that the report suggested that the ‘dovish caucus’ on the committee was smaller than previously thought, with the weight of opinion shifting a little to a view that more QE was not needed. Such a prevailing view is likely to bolster sterling further against the euro, as issues surrounding peripheral eurozone countries like Ireland and Greece continue to play on sentiment.