Britain’s pound rose against the dollar and the euro on Wednesday as investors debated whether or not the Bank of England would cut interest rates when it meets next week.
Financial markets saw less chance on Wednesday that the BoE would trim the current 0.75% rate at its meeting on Jan. 30, after the Confederation of British Industry reported a pick-up in manufacturers’ sentiment.
Money-market pricing suggests investors see around a 50% chance of a quarter-point rate cut, down from 70% on Monday, data showed.
Sterling was rising beforehand, after data released on Tuesday showed the British economy created jobs at its strongest rate in nearly a year in the three months to November.
The pound gained to its strongest level against the euro in more than a month at 1.1852 this morning, building on gains seen in the previous session. It reached a two-week high of $1.3153 versus the U.S. dollar.
For many, the focus now is Friday’s January purchasing managers’ index, widely viewed as a forward-looking indicator that could swing the rate debate one way or another.