London  - The British pound hit a 10-week high against a weaker U.S. dollar on Tuesday as Bank of England Governor Andrew Bailey reiterated that the central bank's stance on interest rates did not need changing.

Bailey told the British parliament's Treasury Select Committee that inflation was on track to get back to the central bank's 2% target but there were risks that price growth could get stuck at a high level, adding that risks were on the upside.

Bailey on Monday said it was "far too early to be thinking about rate cuts".

At the same hearing, Catherine Mann, one of the more hawkish members of the Bank of England's Monetary Policy Committee, said she favoured further tightening to ensure inflation returns to target.

Mann was in the minority when she voted to raise the Bank Rate by 25 basis points in November, a decision that saw the BoE hold rates at a 15-year peak of 5.25% for a second consecutive meeting.

"They (the Bank of England) are trying to retain the option to hike again if needed and at a minimum delay markets pre-emptively pricing any easing," said Simon Harvey, head of FX analysis at Monex Europe.

The pound was last up 0.2% against the dollar at $1.2528, having earlier touched its highest level since Sept. 6 at $1.25535.

Sterling was also up 0.2% at 87.33 pence per euro .

Attention was also on Wednesday's Autumn Statement where British finance minister Jeremy Hunt is scheduled to announce changes to fiscal policy aimed at boosting the stuttering economy.

Analysts said large-scale announcements were not expected as the government would likely prefer to announce significant measures closer to elections, likely to take place in the second half of 2024.

"We think that larger tax cuts are less likely at the Autumn Statement, with the government instead likely to conserve most of its headroom for the Spring Budget," said Goldman Sachs economist James Moberly in a note.

Moberly also noted that a more substantial fiscal loosening at this stage would risk raising inflation and interest rates.

Money market traders expect UK interest rates to have peaked, with markets pricing in around 70 basis points of rate cuts by the end of next year, implying almost three rate cuts by the end of 2024. Last week, markets had been pricing around 60 basis points of cuts by the end of next year.

(Reporting by Samuel Indyk; Editing by Emelia Sithole-Matarise)