By Tom Wilson
LONDON (Reuters) – The pound slipped against the dollar on Friday and held its ground versus the euro, with traders holding off major bets before the Bank of England’s policy meeting next week.
Sterling was down 0.2% at $1.3922, losing ground from a nine-day high hit on Thursday following a slump in the dollar to its lowest in nine weeks after the U.S. Federal Reserve waved off any talk of shifting its monetary policy.
The dollar bounced back slightly against a basket of major currencies and was last up 0.1% – though still heading towards a fourth straight weekly decline.
Versus the euro, it was flat at 86.92 pence per euro, pinned in the narrow range in which it has traded for most of this month.
Most analysts do not expect major changes to the Bank of England’s policy settings next Thursday.
“What is less likely is that they commit to ending the program early,” said Stephen Gallo, European Head of FX Strategy at BMO Capital Markets, referring to quantitative easing (QE).
Other market players also see a low likelihood of any tapering of its QE until the extent of Britain’s economic recovery from the COVID-19 becomes clearer.
“Our base case is that the MPC (monetary policy committee) delays any QE taper to June,” Deutsche Bank analysts wrote. “This should give the committee confidence around the recovery.”
(Reporting by Tom Wilson, Editing by William Maclean)