LONDON, March 2 Reuters The pound dipped on Thursday as the dollar rallied and speculation grew that the Bank of England may not hike interest rates any further.

Sterling was last down 0.45 against the dollar at 1.197. Meanwhile the euro was up 0.05 against the pound at 88.72 pence.

Analysts said the dollar and British interest rate outlook were driving the pound.

Bank of England Governor Andrew Bailey on Wednesday raised the prospect that the central bank might not need to raise interest rates again, after hiking them to 4 from just 0.1 in December 2021.

Bailey said some further increase in rates may turn out to be appropriate, but nothing is decided.

Bailey39;s more dovish talk yesterday, it39;s definitely taken some of the wind out of the sails of sterling, said Ben Laidler, global markets strategist at trading platform eToro.

Expectations for lower interest rates tend to weigh on a currency, by making investments in a country look less attractive than those elsewhere.

Laidler said hopes of a pause received a boost from a BoE survey on Thursday, which showed British business scaled back their plans to increase prices over the coming year in February.

Simon Harvey, head of FX strategy at currency firm Monex Europe, said the data suggests that inflation expectations are moderating.

Although firms are still facing hiring difficulties… they are less willing to overpay for the marginal worker than in previous months, he added.

Meanwhile, the dollar index ,…