With traders looking to the global risk sentiment for direction on the currency ahead of a slow week in Britain, sterling sank versus the dollar and the euro on Monday.
The pound has fallen 0.27% versus the dollar to $1.201 by 11:09 GMT and 0.25% against the euro to 88.50 pence.
Francesco Pesole, an ING FX strategist, said there isn’t much going on in the sterling market right now. “We already heard from some Bank of England speakers last week, and the calendar is looking pretty quiet,” he added.
In order for traders to predict how much farther the U.S. central bank will raise interest rates, Pesole pointed to the impending testimony from Federal Reserve Chair Jerome Powell on Tuesday and a jobs report from the US on Friday.
Since sterling often has a larger sensitivity to the overall risk sentiment, we will also be keeping an eye on the cable side and the euro/sterling, according to Pesole.
On the data front, a poll released on Monday indicated that after two consecutive months of decreases, British construction activity grew at its strongest rate in nine months in February as a resurgence in commercial work and civil engineering helped counteract a persistent decline in house-building.
Sarah Breeden, a BoE policymaker, is anticipated to make comments on Wednesday, and a British GDP estimate for January is scheduled to be released on Friday. They will provide information on the state of the British economy, which narrowly avoided a recession in December according to earlier data.
The market is pricing in a 93% chance of a 25-basis point rate increase when the central bank meets on March 23 for its next policy meeting. The bank rate currently stands at 4% after 10 rate increases in a row by the BoE since late 2021.
According to data on Friday, the British economy stagnated in the three months leading up to January.