Pound holds steady near $1.37

Against the euro, the pound was little changed at 86.61 pence

The pound held steady against the dollar on Monday near a multi-year high hit last week as attention focused on a Bank of England policy announcement on Thursday.

The currency was last up less than 0.1% versus the dollar at $1.3696. It hit $1.3867 last week, its highest since September 2021.

Against the euro, the pound was little changed at 86.61 pence.

Attention this week is on the BoE, with the central bank expected to hold its benchmark interest rate at 3.75% when it announces policy on Thursday, according to all but two economists surveyed by Reuters in a January poll.

Data has remained robust since the last meeting when the central bank lowered the Bank Rate, while inflation remains the highest among Group of Seven industrialised peers, suggesting that the BoE can hold off from cutting rates for now.

The last two meetings have seen rate-setters deeply divided, but the decision this time should be more straightforward.

This week we could, for once, have a boring Bank of England meeting, said Mohamad Al-Saraf, FX and fixed income associate at Danske Bank, who expects the central bank to keep the interest rate on hold.

We don’t expect something major in terms of market reaction, and we don’t believe it will have major implications for the pound, he said.

A closely watched barometer of the health of Britain’s manufacturing sector, the S&P Global Manufacturing Purchasing Managers’ Index, rose to its highest since August 2024 last month, a survey showed on Monday, adding to signs of a pick-up in the economy after a sluggish end to 2025.