Pound Rises: Traders Await BoE Monetary Policy Decision

The British pound advanced against major counterparts in European trading on Monday as markets looked ahead to this week’s central bank decisions in the United States and the United Kingdom. Expectations for a rate cut by the Federal Reserve and a steady policy stance from the Bank of England shaped sentiment, while traders also eyed upcoming UK labor data.

Market-implied probabilities suggest a 94.2% chance that the Federal Reserve will lower interest rates by 25 basis points to a 4.00%–4.25% range at Wednesday’s announcement, amid increased concerns about the labor market. In contrast, the Bank of England is widely expected to keep its policy rate unchanged at 4.00% on Thursday, given persistent inflationary pressures in the UK economy.

Investors will closely monitor the UK jobs report due Tuesday for any signals that could influence the BoE’s outlook and future rate path.

Currency Moves

During the session, the pound climbed to a more than two-month high of 1.3600 against the U.S. dollar, up from an earlier low of 1.3549. Should momentum continue, the next potential upside target is around the 1.37 area.

Against the euro and the Swiss franc, sterling advanced to five-day highs of 0.8633 and 1.0825, respectively, from early lows of 0.8652 and 1.0795. Further gains could encounter resistance near 0.85 versus the euro and 1.09 against the franc.

Versus the yen, the pound edged up to 200.45 from 199.93. On the topside, 201.0 is seen as the next resistance level.

What to Watch Next

Later in the New York session, attention will turn to Canadian manufacturing and wholesale sales for July, the U.S. NY Empire State manufacturing index for September, and the U.S. NOPA crush report. These releases could influence risk appetite and U.S. dollar dynamics, indirectly affecting sterling’s near-term direction.