LONDON, Nov 2 — Sterling edged up against the dollar today as markets braced for policy decisions from the US Federal Reserve and Bank of England on benchmark interest rates aimed at curbing soaring inflation.

The Fed is set to meet later today and the BoE follows suit tomorrow, 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 2pm EDT (1800 GMT) today.

Sterling edged up 0.1 per cent against the dollar to US$1.14990 (RM5.45). Against the euro, the pound was last down 0.1 per cent 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 US$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. — Reuters