The sterling fell by 0.17% against the dollar on Wednesday as traders anxiously awaited the Federal Reserve’s latest interest rate decision due to be announced later in the day. The Bank of England is set to announce its own interest rate decision on Thursday.
Markets are expecting the Fed to hold its interest rates steady at around 5.25%; their highest level over the past 22 years. Money markets are expecting the same from the BoE, pricing a 92% chance that its interest will go unchanged.
“Since the last MPR (monetary policy rate) in August, the data has largely supported the decision to hold, pointing to a loosening in the labour market (from what we can tell), slowdown in economic activity and easing inflation,” RCB economists said of the current financial situation.