Sterling steady ahead of Bank of England decision

The pound remained stable against the dollar on Thursday, set for a major decision by the Bank of England regarding UK interest rates. Market sentiment remains cautious, expecting the central bank's stance on monetary policy amid a flurry of central bank meetings this week.

Earlier in the week, the Bank of Japan surprised markets by abandoning negative interest rates and initiating the first rate hike in 17 years. On the other hand, the Federal Reserve, in its meeting on Wednesday, reaffirmed expectations of potential interest rate cuts in the US later this year.

Thursday will see key decisions from the Swiss National Bank and the Norges Bank, adding to the overall market anticipation.

Traders are eyeing a potential rate cut by the Federal Reserve in June, with expectations that rates may end the year lower, contrasting with the current range. Meanwhile, the Bank of England might not immediately follow suit, but recent inflation data suggesting a moderation in consumer price pressures has heightened speculations for a rate cut as early as June.

The Bank of England's decision-making process is under scrutiny, particularly regarding the possibility of any dissenting voices advocating for a rate hike. Progress in wage increases and inflation dynamics could influence the decision, potentially paving the way for rate cuts in the future.

Sterling remained stable against the dollar, reflecting a monthly gain thus far and positioning itself for the largest monthly increase against the dollar since November. The euro traded flat against the pound, experiencing marginal losses this month.

The comparative strength of UK rates against global counterparts has bolstered sterling's performance, making it the top performer against the dollar among G10 currencies this year. This contrasts starkly with the performance of currencies like the Chinese yuan, which has faced depreciation against the dollar, and the Japanese yen, which has witnessed significant devaluation.

(With Reuters inputs)