The pound sterling strengthened against the dollar on Monday, rising 0.5 per cent to $1.3190, following a slight decline last week. This uptick comes ahead of crucial UK inflation data and the upcoming Bank of England (BoE) meeting. Sterling's resilience is attributed to expectations that the BoE might adopt a less aggressive stance on rate cuts due to anticipated core inflation increases. The central bank is expected to hold interest rates steady after a 25-basis-point cut last month. However, futures markets suggest a 38 per cent chance of an additional quarter-point cut, up from 20 per cent on Friday. Inflation figures, due on Wednesday, are pivotal for the BoE's policy decision. Recent data indicated an unexpected economic stagnation in July. Commerzbank's Volkmar Baur noted that a rise in core inflation is likely to prevent a rate change, but weaker economic data could complicate the BoE's decision. The euro remained steady against the pound at 84.35 pence. Meanwhile, the dollar weakened, and the yen hit a one-year high as markets anticipated a significant rate cut by the Federal Reserve later this week. Attribution: Reuters Subediting: M. S. Salama
