With no economic data released today, the British pound held steady against the Euro and Japanese Yen, while strengthening modestly against the US dollar following the release of weak US data. UK markets are closed on Monday for the Early May Bank holiday, so we may not see much action in the British pound until Tuesday.
The Bank of England monetary policy meeting is the marquee event in the UK this week. The BoE is expected to raise interest rates to 5.50 percent with the potential of signaling another rate hike beyond that. Economic growth has been decent while inflation remains high which have been the BoE?s arguments for raising interest rates. Another rate hike by the BoE puts UK rates above US rates, which means that the carry is favor of the pound. Further rate hikes beyond that would put the carry even more in favor of the UK and in the medium to long term that will be very beneficial for the British pound.