Sterling steady near 21-month low ahead of BoE, Fed

div classBodysc17zpet90 cdBBJodivpLONDON Reuters – The British pound was little changed on Wednesday, near its lowest level in 21 months, ahead of central bank meetings at the Federal Reserve and Bank of England BoE.p

pThe BoE policy announcement on Thursday will be the key event for sterling this week, with policymakers expected to raise interest rates for the fourth consecutive meeting, the first such run since 1997.pdivdivdiv classBodysc17zpet90 cdBBJodiv

pThe pound has weakened in recent weeks on expectations that the BoE may have to slow the pace of tightening as the central bank battles with abovetarget inflation and a costofliving crisis that is showing signs of weighing on economic activity.p

pShop prices in Britain surged last month at the fastest rate in more than a decade, according to a survey published on Wednesday that spelt further bad news for many households caught in the worsening crisis. p

pThe Fed meanwhile is expected to hike rates by 50 basis points on Wednesday, the first halfpercentage point hike in over two decades. p

p“The worst scenario would be a hawkish FOMC meeting, with stillcautious BoE policy guidance,” writes OANDA senior market analyst Jeffrey Halley. p

p“That likely sees GBPUSD testing 1.2200.”p

pAt 0812 GMT, sterling was up 0.1 against the U.S. dollar at 1.2508, after hitting its lowest level since July 2020 at 1.2412 last week.p

pAgainst the euro, the pound was little changed at 84.12 pence.p

pSterling traders will also be closely watching local elections on Thursday, with Prime Minister Boris Johnsons Conservative party looking set to suffer losses in London and the north of England.