FX round-up: Sterling steady ahead of widely-anticipated BoE hike

Sterling was little changed on Wednesday as traders sat on their hands ahead of the string of key risk-events that they had lined-up before them for over the next few days.

Those included the US central bank's policy announcement later in the same session, the Monetary Policy Committee's decision on rates the next day and the monthly US jobs report, on Friday.

Similarly too, traders in the other main currency pairs typically played it safe ahead of the release of the US non-farm payrolls report each month.

Against that backdrop, as of 1800 BST the pound was drifting 0.08% lower against the US dollar to 1.31128, seemingly brushing-off a report in the Financial Times that the EU was ready to 'fudge' an agreement with London on the terms of Brexit.

The pound was however higher versus the US dollar, adding 0.13% to 1.1242.

Traders were also unfazed by a dip in IHS Markit's manufacturing sector Purchasing Managers' Index for July, which printed at 54.0, which was down from a reading of 54.3 for the month before.

Indeed, analysts at both Barclays Research and Pantheon Macroeconomics appeared to be confident that it would not be enough to sway the MPC from deciding on a rate hike the next day.

Furthermore, and as Samuel Tombs, chief UK economist at Pantheon Macroeconomics pointed out, the BoE had never failed to meet market expectations for a hike when it was almost fully priced-in, as at present, and certainly not without top officials having come out beforehand in an attempt to re-set expectations.

At present, the market-implied odds of a 25 basis point hike in Bank Rate, on Thursday, stood at 90%.

As for the other main currency pairs, euro/dollar was down 0.22% to 1.16650 and dollar/yen off by 0.10% to 111.694.

The US dollar spot index meanwhile was gaining 0.10% to 94.64, with the Greenback strengthening on the back of reports that the White House might be set to ratchet-up the pressure on Beijing regarding trade, possibly before the end of the week.