BoE Decision Expected to Keep Rates Unchanged, Posing Risks for Pound Sterling

The Pound sterling is facing pressure ahead of the Bank of England's policy update and guidance. The central bank will not raise interest rates, unlike its counterparts in the US and Europe, but instead focus on a labour market that shows declining wage pressures.

Wednesday's inflation numbers showed a rate of 3.1%, well above the 2.0% target the Bank aims to hit. Despite this, analysts expect the Bank to keep interest rates unchanged due to its history of maintaining looser policy than traditional rules would imply.

The Pound-to-Euro exchange rate has been declining throughout the week and is currently at 1.1670. ING strategists are cautious about trusting the recent recovery in the pound, citing upside risks for the euro and building downside pressures on the pound.