Sterling Slips as BoE Faces Crucial Policy Decision

Sterling weakened against a robust dollar as investors anticipated the Bank of England's policy decision. While rates are expected to hold steady, changes to its government bond sales program could be announced. The focus remains on the BoE's approach to quantitative tightening amid market volatility and moderate inflation.

Sterling edged lower against a stronger dollar on Thursday as the financial world turned its gaze towards the Bank of England's (BoE) upcoming policy decision. Investors are not expecting a rate hike, but are keenly watching for potential changes in the BoE's bond sale program.

In recent currency dynamics, the pound saw a 0.13% dip, positioning at $1.36125 after a previous high. Meanwhile, the dollar regained strength following a recalibration of markets to the U.S. Federal Reserve's restrained posture on interest rate cuts.

The BoE is likely to maintain rates at 4% but may slow its quantitative tightening (QT) efforts significantly. Adjustments could be made to the sales of government bonds, possibly favoring short-dated gilts, as inflation data shows a 3.8% annual rise, signaling no immediate rate cuts.

(With inputs from agencies.)