Ammon News - The pound rose to its highest in a month on Wednesday as the dollar retreated further after surging two days ago on the threat of sweeping U.S. tariffs, while the focus in UK markets turned to the Bank of England rate decision on Thursday.

Sterling climbed to $1.2532 in morning trade in London, its highest since Jan. 7, and was last up 0.36% at $1.2526.

The U.S. dollar index , which tracks the currency against six peers, fell 0.5% on Wednesday. It has receded since hitting a three-week high on Monday, when it jumped as much as 1.3% as the U.S. looked set to impose tariffs on Mexico and Canada.

The dollar has since fallen around 2.1% after both Mexico and Canada won a one-month reprieve on tariffs, although the U.S. and China increased levies on each other's exports.

A 1% rally in the Japanese yen also knocked the dollar on Wednesday.

Many economists think - and British officials are hopeful - that Britain will be spared the worst of U.S. President Donald Trump's aggressive tariff policies due to a more balanced trade situation between the two countries. Reuters