Sterling holds steady ahead of BoE decision this week

By Amanda ‌Cooper

LONDON, Dec 15 (Reuters) - The pound held steady on Monday ahead of a string ‍of UK ‌data that could help cement expectations for a Bank of England rate cut later in ⁠the week. 

Markets show traders are almost fully ‌pricing in a rate cut on Thursday, when the BoE meets, and traders expect another cut by the middle of 2026, with a possibility of a second by year-end.  

Inflation is still running at nearly ⁠twice the BoE's 2% target rate, but the economy is slowing.

Data last week showed that, on a monthly basis, ​Britain's gross domestic product was barely changed, or contracted, every ‌month since June.

In October, GDP shrank by ⁠0.1% both in the August-October period and during the month alone, against forecasts for a flat reading and a 0.1% rise, respectively, as the economy lost momentum in ​the run-up to finance minister Rachel Reeves' budget in November. 

Sterling, which has risen 7% this year against the dollar, was at $1.3382, little changed on the day, while trading slightly weaker against the euro, which held at 87.755 pence. 

Investors are waiting for the delayed release of ​the ‍U.S. November non-farm payrolls report ​on Tuesday to set the tone for the dollar. 

UK wage growth data is due on Tuesday and consumer price inflation (CPI) on Wednesday. Both will come under close scrutiny from investors. They are unlikely to change expectations for Thursday's BoE meeting, but could prove key in shaping the policy outlook for 2026, analysts said.

"At last, even in these sleepy weeks before Christmas, there ⁠is still much to discuss," Caxton strategist David Stritch said.

"Whilst the delayed U.S. non-farm payroll data releasing tomorrow may have the most ​worldwide traders glued to their desks, UK CPI, unemployment and the BoE decision will be the most crucial for the sterling 2026 outlook."

Data on Monday from property website Rightmove showed asking prices for British homes have fallen by more than is ‌usual for the time of year, in what could be a reflection of increased uncertainty in the property market ahead of last month's budget.

(Reporting by Amanda Cooper; Editing by Tomasz Janowski)