LONDON: Sterling edged up against the dollar on Wednesday as markets braced for policy decisions from the U.S. Federal Reserve and Bank of England on benchmark interest rates aimed at curbing soaring inflation.
The Fed is set to meet later on Wednesday and the BoE follows suit on Thursday, with investors focused as much on any clues as to the path of future rate hikes as on immediate moves.
Both the Fed and the BoE are expected to hike interest rates by 75 basis points at their respective meetings.
The dollar weakened broadly in early European trading hours - supporting currencies including the pound - on market bets the Fed would signal a slower pace of tightening in future. The central bank is due to release its policy statement at 2 p.m. EDT (1800 GMT) on Wednesday.
Sterling edged up 0.1% against the dollar to $1.14990 . Against the euro, the pound was last down 0.1% at 86.08 pence . Currency analysts said the Fed meeting would likely set the tone ahead of the BoE's decision on Thursday.
"Investors are hoping for the Fed to temper rate hikes and that's helping cable (the pound to dollar currency pair)," said Lee Hardman, currency analyst at MUFG.
"Our worry is the Fed could be less hawkish than priced. If there's any disappointment that could put some downward pressure on cable tomorrow."
Markets are also focused on whether the BoE will signal it may not need to hike rates as fast as thought, Hardman added.
The pound has rebounded since slumping to a record low of $1.03270 in late September, prompted by market fallout over the vast tax-cutting plans of Liz Truss' short-lived government.
Sterling has broadly gained against the dollar since then, supported by investors warming to the more fiscally moderate prime minister Rishi Sunak.
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