Sterling remained below seven-month highs against the dollar on Thursday, as investors waited for UK economic data and a Bank of England interest rate decision and inflation report due later in the day, neither of which is expected to indicate a change in bank policy. A quieting of global market volatility and developments on its talks on leaving the European Union have helped the pound since it gained 3 percent gain on Prime Minister Theresa May’s announcement of a June 8 parliamentary election last month.
But sterling has also struggled to climb past $1.30, and there was little confidence among dealers of a signal from the Bank of England on Thursday that would send it higher, even as inflation tops the bank’s 2 percent target.
The pound was flat at $1.2942 and 0.1 percent lower at 84.04 pence per euro. The BoE is expected to leave record-low interest rates unchanged. Brexit, a national election and mixed economic data are likely to leave the Bank seeking more clarity before it raises rates for the first time in nearly a decade.
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“Despite 1Q17 GDP growth disappointing the BoE’s forecasts, the focus today will be on whether anyone joins Kristin Forbes in voting for a hike,” ING head of FX strategy Chris Turner wrote in a note, highlighting the decision of one BoE policymaker to vote for a rate increase in March.
“After Charlotte Hogg’s resignation, there are only 8 members on the MPC (Monetary Policy Committee) now, meaning we are likely to see a 7-1 vote for unchanged policy. A 6-2 vote, with perhaps Michael Saunders voting for a hike, would be a surprise and would lift sterling.”
UK output data for the construction, industrial and manufacturing sectors is due at 0830 GMT. The BoE’s rates decision and inflation report come at 1000 GMT.