Investors have now fully priced a 25-basis-point rise in the BoE’s main interest rate to 0.50% on Feb. 3 and economists polled by Reuters also expect that outcome from the meeting.
Amid fears the central bank might be behind the curve when it comes to tackling inflation, there is uncertainty over the pace at which it will raise rates and the level at which they will peak.
At the moment, money markets are pricing the BoE’s main rate to be about 1.25% by the end of the year.
With the 0.5% level expected to be hit on Thursday, traders are also wondering how soon and how fast the bank will start reducing its balance sheet and stop reinvesting maturing gilts.
By 1543 GMT, the pound was up 0.39% at $1.349, pulling further away from one-month lows of $1.3359 hit last week and back to the levels it was trading at on Jan. 26.
The pound ended January down 0.58% against the dollar, which had benefited from the ramping up of U.S….