Sterling was largely flat as investors await the BoE’s meeting later this week. The central bank is likely to hike interest rates for the 15th time on Thursday as inflation remains elevated even as the U.K. economy falters. However, there are increasing possibilities that the BOE might signal an end to its rate-hiking cycle after Thursday’s expected increase.
The Euro tried to retrace part of last week’s losses as investors continue to assess the dovish hike by the European Central Bank. Looking forward, ECB policy makers Luis de Guindos, Frank Elderson and Fabio Panetta are scheduled to speak later today. Their comments will be studied to understand the extent of their dovish turn following indications of an end to the year-long rate-hiking cycle.
The US dollar edged lower in early European trade this morning, but remained near six-month highs as traders cautiously await the Fed’s rate decision this week. On that note, the Fed is widely expected to keep interest rates on hold, however, it’s also likely to maintain its hawkish stance, signalling the possibility of at least one more hike this year.
