LONDON, July 4: The pound held its ground above two dollars on Wednesday but eased back from a 26-year high posted earlier in the day with the United States Independence Day holiday and looming European interest rate decisions limiting currency markets movement, dealers said.

The pound rose as high as $2.0207 in early European trade -— the highest level since June 1981, but stood later at $2.0161.

The euro edged up to $1.3623 from $1.3610 late on Tuesday in New York. US markets were closed on Wednesday for the national holiday.

“Independence Day in the US suggests a quiet day in the foreign exchange market ahead of the key rate decisions from the ECB and BoE on Thursday,” said Derek Halpenny, senior currency economist at The Bank of Tokyo-Mitsubishi in London.

Investors were widely expecting the Bank of England (BoE) to raise interest rates a quarter point to 5.75 per cent on Thursday and this coupled with widespread dollar weakness pushed sterling higher.

But analysts are now doubtful about how much higher sterling can go.—AFP