LONDON: Sterling firmed slightly on Monday after four straight weeks of declines versus the dollar, as traders looked ahead to a run of British economic data this week that could influence how quickly the Bank of England (BoE) cuts interest rates.
The BoE cut rates for the first time since 2020 at the start of this month, but was cautious on prospects for more easing.
British employment data due on Tuesday, inflation figures on Wednesday and economic output data on Thursday could start to clear up the picture.
Catherine Mann, an external member of the BoE’s Monetary Policy Committee, said in a podcast released on Monday that goods and services prices were set to rise again and wage pressures in the economy could take years to dissipate.
“The BoE’s decision to begin cutting rates this month was a very close call and the guidance indicated that they are not in rush to cut again,” currency analysts at MUFG said in a note.
“[This week’s data] will be important in helping the BoE to further assess inflation persistence risks in the UK.” Sterling was last up 0.1% versus the dollar at $1.2764.
Sterling on track for 4-week of decline versus dollar
It had fallen to a more than five-week low of $1.26655 on Thursday.
Against the euro, the pound was broadly flat at 85.54 pence per euro.
Money markets show traders are pricing in further BoE rate cuts of 44 basis points (bps) by the end of this year, compared to 101 bps from the US Federal Reserve.
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