By Alun John
LONDON (Reuters) - Sterling held steady against the dollar and dipped against the euro on Wednesday as traders waited for key U.S. inflation data as well as comments from Bank of England governor Andrew Bailey.
The pound was flat at $1.24155, not far off a 10-month high of $1.2525 hit early last week, as currency markets broadly were quiet ahead of the release of the U.S. consumer price index for March. [FRX/]
The data will be a major input for Federal Reserve policy markers as they debate whether to raise U.S. rates further at their meeting in March.
More Britain-specifically, Bailey is due to speak later, with traders keeping their eyes out for guidance on whether the BOE is ready to pause its rate hike cycle.
Market pricing currently indicates around a 75% chance of one more 25 basis point hike.
"GBP/USD can be sensitive to comments from BoE officials on the outlook for inflation and monetary policy because the BoE’s tightening cycle is likely near its end," said Kristina Clifton, FX strategist at Commonwealth Bank of Australia.
However she added that U.S. CPI and its impact on the dollar were likely to be the main driver for the pound against the dollar.
Better-than-feared economic data this year has helped the pound be the best G10 performer against the U.S. dollar both simply because of improved economic prospects but also because it means the Bank of England cannot rely on a slowdown to rein in inflation.
The euro rose 0.22% against the pound to 88.05 pence, its strongest in just over a week.