The pound finished last week at strong levels against the euro and the dollar. It is still trading around the same levels this morning ahead of the Bank of England’s monetary policy meeting, which is due to take place on Thursday.
There are expectations that officials will raise the interest rate again on Thursday, after hiking the rate back in December to 0.25%. If the Bank send a ‘hawkish’ message at the meeting, raising rates to 0.5% and signalling that there are more rate hikes to come, then sterling could benefit.
Expectations for an interest rate hike have grown due to the need to combat rising inflation, which came in at 5.4% in December.
In the lead up to the meeting, Manufacturing PMI data will be released tomorrow, followed by Services and Composite PMI on Thursday morning. These releases will give an indication of how the UK economy performed in January.
