The pound lost more ground on Wednesday after the minutes of the Bank of England’s June meeting showed the central bank was likely to keep UK interest rates on hold for some time.

This contrasted with expectations for monetary tightening priced into the market.

On Tuesday, the pound fell after Mervyn King, governor of the Bank of England, warned that although the UK faced the prospect of increasing inflationary pressures, the central bank was in no position to raise rates given the weakness of the economy and the risk posed to financial markets.

Analysts said the minutes of the Bank’s June meeting, at which it kept rates on hold at 5 per cent, did little to dispel this notion.

One member of the Bank’s nine-strong Monetary Policy Committee voted to cut rates by 25 basis points, while two members discussed the possibility of a rise in rates.

However, analysts said the tone of the minutes suggested the central bank was in “wait-and-see” mode as it looked for evidence that could shift the balance of risks in the economy more clearly towards either slower growth or higher inflation.

By midday in New York, the pound had fallen 0.1 per cent to $1.9540 against the dollar, dropped 0.1 per cent to £0.7930 against the euro and lost 0.1 per cent to Y211.00 against the yen.

Elsewhere, the Swiss franc was little changed ahead of the Swiss National Bank’s decision on rates on Thursday.

Most analysts were expecting the SNB to keep rates on hold at 2.75 per cent in spite of a worrying surge in Swiss inflation, which in May hit its highest level since 1993.

However, Lee Hardman at Bank of Tokyo-Mitsubishi UFJ said the central bank could spring a surprise and raise rates.

He said there was a risk that the SNB might pre-empt the European Central Bank’s well-telegraphed 25-basis-point rate rise set for its July meeting.

He said: “The SNB will be aware that delaying monetary tightening could potentially exacerbate Swiss franc weakness against the euro given the ECB’s monetary tightening intentions”.

The Swiss franc was little changed at SFr1.6150 against the euro and marginally higher at SFr1.0420 against the dollar.

Meanwhile, the dollar was little changed amid a dearth of economic data, standing flat at $1.5500 against the euro and little changed at Y107.95 against the yen.

Elsewhere, the Czech koruna climbed 0.5 per cent to a record high of Kc24.058 against the euro after an unexpected narrowing of the country’s current account deficit.

The Hungarian forint rose 1 per cent to Ft243.00 against the euro after a surprise decision by Daimler, the German carmaker, to build a €800m car plant in southern Hungary.