Sterling Holds Steady as Markets Eye Bank of England's Next Move

Sterling was stable following the Federal Reserve meeting, with attention shifting to the Bank of England's imminent rate decision. The Fed raised rates to combat inflation, while the BoE is expected to maintain current rates. Rising inflation and energy costs pose ongoing challenges for the UK economy.

Sterling exhibited minimal changes on Thursday as the Federal Reserve's policy meeting concluded, with investor focus turning to the Bank of England's imminent rate decision.

The U.S. dollar surged to a seven-week high post-Federal Reserve rate hike, affirming its inflation-fighting stance, but later retreated as energy prices fell. Meanwhile, the Bank of England seems poised to maintain steady interest rates and gradually reduce its government bond holdings.

A dovish stance by the BoE could support the pound, though significant gains are unlikely before the UK budget on October 28th, according to Derek Halpenny, MUFG's head of research for global markets. Prime Minister Andy Burnham has pledged to make necessary tough decisions to stabilize the economy, amid rising inflation rates.