Sterling hits two-month high ahead of Bank of England's hearing session

Sterling rose in European trade on Tuesday against a basket of major rivals, extending gains for the third straight session against dollar and scaling a two-month high following bullish remarks from Bank of England Governor Andrew Bailey.

To review such prospects, investors now await a crucial hearing session in the UK Parliament dedicated to BOE officials. 

The session is expected to shed light on the likely path ahead in UK monetary policies.

GBP/USD

GBP/USD rose 0.3% to 1.2540, the highest since September 11, with a session-low at 1.2500, after rising 0.35% on Monday, the second profit in a row, amid a strong risk appetite dominating the market. 

Bailey 

Bank of England Governor Andrew Bailey said it's still too early to talk about cutting interest rates, asserting the focus now is still on bringing inflation back to 2%. 

Bailey said the BOE will continue to monitor inflation data and gauge the sustainability of the current inflation spike. 

He opened the door for another interest rate hike if needed and asserted the need for an extended duration of high interest rates. 

Hearing Session 

Later today, a Parliamentary session dedicated for Bank of England policies will be held. 

The BOE said after its November meeting that monetary policies must remain tight for an extended duration to bring inflation towards the 2% target. 

The BOE's policymakers expected the risks threatening higher inflation to remain on the upside for some time.