Sterling's Struggle: Uncertainty Looms Over Bank of England Meeting

The British pound faces pressure against the dollar and euro as anticipation builds for the Bank of England meeting, where a potential rate cut is uncertain. Despite strong factory data, sterling remains low. The market sees a one-in-three chance of a cut this week, with eyes on December.

The British pound remained under pressure on Monday, facing challenging conditions against both the dollar and euro. Traders are preparing for a pivotal Bank of England meeting on Thursday, which carries significant uncertainty regarding a potential interest rate cut.

Despite data indicating the strongest performance for British factories in a year, driven by unique factors, sterling saw little improvement. The currency was down 0.27% against the dollar, settling at $1.3132, hovering just above a recent six-month low, and showed little movement against the euro.

Market analysts are now focusing on the Bank of England's upcoming decision. Current market pricing suggests a one-in-three chance of a 25-basis-point rate cut this week, with even higher odds for next week or December. Revelations from British finance minister Rachel Reeves' budget in November could further sway market dynamics.

(With inputs from agencies.)