The sterling dipped slightly below $1.27 as traders assessed key economic data and awaited the Bank of England's monetary policy decision on Thursday.
British pound edges down slightly, BoE awaited
The UK’s annual inflation rate rose for a second consecutive month, reaching 2.6% in November, in line with expectations. Services inflation held steady at 5%, slightly below the forecast of 5.1%, but above the BoE's estimate of 4.9%. Earlier in the week, UK wage growth exceeded expectations.
BoE set to paus hikes
The Bank of England is widely anticipated to keep the benchmark interest rate unchanged and maintain a cautious stance on rate cuts. Investors are expecting two quarter-point rate reductions and assigning roughly a 40% probability of a third cut by the end of 2025.
