The pound edged lower on Wednesday as investors awaited a series of central bank meetings, including the Bank of England’s policy decision.
The pound was down 0.1% against the dollar (GBPUSD=X), at $1.3346 and steady versus the euro (GBPEUR=X), at €1.1581.
The US dollar index (DX-Y.NYB), which measures the currency against a basket of six major peers, rose 0.1% to 99.67.
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Forex markets have become more cautious ahead of central bank meetings in the US and the UK. The Federal Reserve is widely expected to keep its benchmark federal funds rate in the range of 3.50% to 3.75%, with the announcement scheduled for later today.
“The pound strength has been fading as the UK faces mounting vulnerabilities, including sticky inflation fuelled by higher energy prices, strained public finances, weak growth, and rising political risks,” said strategists at Rabobank in a research note.
Investors also expect the BoE to keep rates steady on Thursday, with particular attention on any signals regarding policymakers’ responses to a potential new oil shock.
“The Bank of England meeting on Thursday is the main focus, especially the Monetary Policy Committee’s reaction to the prospect of sharply higher energy prices and market assumptions that the bank is done cutting,” said Enrique Diaz Alvarez, chief economist and credit risk officer at Ebury.
In equities, the FTSE 100 (^FTSE) was higher on Wednesday morning, climbing 0.2% to trade at 10,423 points at the time of writing. For more details on market movements, check our live coverage here.
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