Sterling steady ahead of expected BoE hike

Sterling was broadly steady on Monday as markets focused on an expected Bank of England quarter-point rate hike to 4% on Thursday, the first since August 2023. Elevated energy prices and inflation risks are strengthening the case for tightening, while resilient UK data, a budget seen as staying within fiscal rules, and improved ties with the EU have helped support the pound. Analysts say further tightening may follow, but caution that markets have already priced in substantial hikes and the BoE could signal that rates will not rise as far as investors expect. Traders are also watching U.S. employment data and midterm elections, which could bolster the dollar if the jobs picture is stronger than forecast. In the near term, GBP/USD is seen trading in a narrow range, while sterling’s recent gains against the euro may pause without necessarily marking a lasting low for the pair.