Sterling rises ahead of BoE meeting

The currency was last up 0.05% on the day against the dollar at $1.3328

Sterling ticked higher against the U.S. dollar as investors waited for a heavy slate of central bank meetings, including the Bank of England.

UK’s lower exposure to energy shocks compared with the euro area has also helped underpin sterling’s recent resilience against the single currency.

The currency was last up 0.05% on the day against the dollar at $1.3328. It hit $1.322 ​last week its lowest level since December 3.

The dollar jumped sharply ​during the Middle East war as investors sought safe-haven assets, while other currencies ‌were more vulnerable to the adverse economic fallout from latest oil shock. It struggled for direction ⁠on Tuesday as investors shifted their focus to this week’s central bank meetings amid uncertainty ​about the war in the Middle East and the oil price outlook.

Investors expect the BoE to keep ​rates steady on Thursday, with investors closely watching any signals about how policymakers would react to a potential new oil shock.

The Bank of England meeting on Thursday is the main focus, in particular the Monetary ​Policy Committee members’ 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.

J.P. ⁠Morgan now expects the Bank of England to keep interest rates unchanged throughout 2026.

The euro was roughly unchanged at 86.35 pence after hitting 86.18 pence last week, its lowest since early February.

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, after highlighting that Sterling net short positions have jumped ​for the fifth week in a row.