The US dollar regained some lost ground against the British pound and the euro, but lost some momentum against the Japanese yen as hopes diminished of further British interest rate hikes, traders said.

The pound had rallied to 15 year highs against the US unit Tuesday as traders speculated on future interest rate spreads, betting that British rates would rise while US rates would remain unchanged.

The pound was changing hands at 1.9687 dollars at 2200 GMT, down from 1.9811 dollars late Tuesday. The British currency had spiked as high as 1.990 dollars Tuesday, marking its highest level against the dollar since 1992.

"Little was happening on the dollars economic calendar Wednesday, but that didnt keep traders from bidding the currency against most of its liquid pairings," said John Kicklighter, a currency analyst at Forex Capital Markets.

The pound's rise was repelled Wednesday, however, following the release of minutes from the Bank of England's (BoE) last interest rate meeting.

BoE policymakers voted by a tight 5-4 majority for a surprise interest rate increase earlier this month to 5.25 percent, the minutes revealed.

The minutes caused traders to scale back their expectations for further British interest rate hikes in coming months, as analysts said a a back-to-back rise in rates next month now looked increasingly unlikely.

The euro was meanwhile trading at under the 1.30 dollar mark at 1.2965 dollars late Wednesday, down notably from 1.3025 dollars on Tuesday. Traders said this was partially due to some profit-taking.

The US unit meanwhile dropped a few notches against the Japanese yen to 121.13 yen against 121.62 yen late Tuesday in New York.

Traders said, however, that the dollar's gains were not likely to be too hefty and would probably meet resistance, as US interest rates are not expected to be hiked any time soon and as concerns persist over the bulging US trade deficit.

The dollar stood at 1.2477 Swiss francs, from 1.2423 Tuesday.

Provided by AFP.