SINGAPORELONDON, July 11 Reuters Sterling hit a fourmonth high on Thursday as comments from Bank of England policymakers and a betterthanforecast GDP data led traders to reduce bets on an August rate cut, while they awaited crucial U.S. inflation data.

The pound advanced 0.16 to 1.2864, its highest level since early March, after BoE chief economist Huw Pill said on Wednesday price pressure remained persistent and Thursday data showed British economic output increased by 0.4 in May, above expectations.

The timing of a rate cut was an open question, Pill said. Futures markets now show traders attach a roughly 5050 chance of the Bank of England cutting rates at its Aug. 1 meeting.

The comments and Thursday39;s GDP data were supporting the pound, said Lee Hardman senior FX analyst at MUFG in a note.

The minutes from the BoE39;s last policy meeting in June had indicated that some of the seven MPC members who voted to keep rates on hold thought the decision was finely balanced, said Hardman.

But the overall tone of Pill39;s comments suggested that he is not yet ready to change his vote in favour of a rate cut at the August MPC meeting, he added.

The pound also firmed to its strongest on the euro in a month, with the common currency at 84.21 pence.

Versus the dollar, the euro was around 0.1 higher at 1.0840

But the main scheduled event of the day and arguably the week for currency markets is U.S. inflation data due at 1230 GMT, which will reinforce or challenge…