LONDON, Nov 25 (Reuters) - Sterling steadied on Thursday
close to a 2021 low against the dollar, supported by
expectations of a rate hike in the United States, while
investors awaited for a Bank of England Governor's speech later
in the day.
Analysts and investors are looking for signs on whether the
Bank of England will hike rates in its Dec. 16 meeting.
Markets broadly expect the central bank to raise interest
rates next month. But everything could happen, analysts said.
The BoE wrong-footed many investors when it kept policy
steady at record lows in its November meeting, following
comments from Andrew Bailey in October that policymakers "will
have to act" to head off inflation.
"We continue to expect the bank to tighten next month, by 15
basis points. It will be interesting to determine how Governor
Bailey deals with close questioning in the wake of marching the
market up the rate hill this month only to disappoint those
expecting a hike," said Jeremy Stretch, head of G10 FX strategy
BoE policymaker Silvana Tenreyro said on Wednesday she was
thinking "more in the medium term" on the question of when the
central bank should start to raise interest rates from their
pandemic emergency low. Tenreyro was one of seven members of the
nine-strong Monetary Policy Committee who voted to keep
borrowing costs on hold earlier this month.
The pound flattened versus the dollar to $1.3331 at 0940
GMT, after hitting its lowest level versus the greenback since
December 2020 in the previous day.
Analysts said recent moves versus the dollar have been a
reflection of the strengthening dollar on the expectations the
Federal Reserve will raise interest rates.
Against the euro, sterling edged 0.1% lower at
84.15 pence, remaining close to a 21-month high of 83.80 touched
on Monday against the weakening single currency, hit by new
COVID-19 restrictions across the region.
"The focus has moved on from GBP this week as the dollar
stays strong across the board and continental Europe suffers
fourth waves in the pandemic," ING analysts said.
(Reporting by Joice Alves; Editing by Angus MacSwan)