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By Anirban Nag
LONDON, April 22 (Reuters) - Sterling rose past $1.50 to hit a session high against the dollar on Wednesday, after minutes from the latest Bank of England policy meeting showed policymakers slightly more focused on the risks inflation might accelerate.
Traders said sterling was also helped by a growing view within the nine-member monetary policy committee that the next move by the BoE (Shenzhen: 000725.SZ - news) will be a rate hike. The minutes of the April 8-9 meeting showed that the officials voted unanimously to keep rates steady at a record-low 0.5 percent, but for two members this decision remained "finely balanced".
The BoE also noted the possibility that sterling strength had been having a more rapid than expected effect on keeping inflation muted, implying that prices might bounce back more strongly.
Sterling hit a session high of $1.5027 after the minutes were released, from about $1.4936 beforehand, and leaving it 0.7 percent higher on the day. The euro was down 0.1 percent against the pound at 71.81 pence.
"The minutes were less dovish than expected," said Richard de Meo, managing director at Foenix Partners, a company that offers currency solutions to UK companies.
"They seem to be talking up inflation prospects. Sterling has risen above $1.50 and could stay there for a couple of days but given the election uncertainty, I wouldn't expect it to stay there for long."
Investors have been increasingly buying insurance to hedge against bouts of volatility in the currency in the weeks around the May 7 poll.
Polls show the Conservative and opposition Labour parties neck and neck, making a hung parliament likely. A strong showing by smaller parties such as the Scottish Nationalists also makes it hard to predict what kind of government will be formed.
Markets are worried that a weak administration might be unable to deal with Britain's twin deficits and are concerned about the Conservatives promise to hold a referendum on whether Britain should leave the European Union.
"I can't see a massive sustained rally with so much political uncertainty," said a spot trader. "The election concerns will keep sterling rallies limited." (Editing by Louise Ireland)