LONDON (ShareCast) - Sterling moved ahead on Wednesday after minutes from the Bank of England's rate setting meeting earlier in the month showed that one policymaker was arguing for a rise in interest rates to help combat inflation.

Timothy Besley became the first Monetary Policy Committee (MPC) member to call for higher borrowing costs in over a year, minutes from the July 9-10 gathering revealed.

As expected, perennial dove David Blanchflower voted for a quarter point cut, but the other seven MPC members, including governor Mervyn King, won the fight to keep rates at 5% for the third month in a row.

Analysts fear Besley may eventually get his way as soaring food and fuel prices sent annual inflation to 3.8% in June, the highest since records began in 1997.

The euro was down, pressured by talks that Spain's BBVA Bank was interested in UK's HBOS, while the dollar was helped by lower oil prices.

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