Sterling Steady Before BoE Decision Amid Inflation Concerns

Sterling held steady on Thursday ahead of the Bank of England's interest rate decision. The British currency had been little changed at around $1.3387 and 85.7 pence to the euro.

The Federal Reserve's rate hike had initially strengthened the dollar, but later eased, leaving sterling little changed ahead of the BoE meeting. Markets priced in roughly a 20% chance of a BoE rate hike on September 17, with expectations for two more hikes before end-2026.

Derek Halpenny, head of research at MUFG, said that a dovish hold by the BoE would help support the pound. However, he remained skeptical about any notable upside ahead of the UK budget on October 28th.