Investors pushed sterling to a six-year high against the dollar yesterday after manufacturing data boosted expectations the Bank of England will become the first big central bank to raise interest rates.

Rebounding UK growth has pushed the pound up around 11 per cent against the dollar and 7 per cent against the euro in the past year, the strongest performance of any of the major developed country currencies. Yesterday it increased another 0.3 per cent against the dollar to trade at $1.7146 and by 0.3 per cent against the single currency to €1.2535.

A stronger pound makes life harder for exporters but will boost consumers’ spending power, since it cuts the cost of imported goods and makes holidays abroad less expensive.

Policymakers expressed concern about the rise, arguing it could exacerbate existing imbalances in the British economy.The pound’s rise reflects investors’ strengthening conviction that the BoE will tighten monetary policy before the end of the year.