The BoE is widely expected to revise up its short-term growth and inflation forecasts following reassuring recent UK data, but the uncertainty surrounding soon-to-start Brexit negotiations is expected to keep it cautious.
Sterling was quickly down 0.3 percent against the dollar at $1.2510 in London, having slipped off a five-week high at the end of last week.
The pound has fallen roughly 19 percent against the dollar since June’s Brexit vote, but for the last few months it has been in a relatively restrained range of between $1.20 and $1.28 and 84 pence and 88 pence per euro.
The dollar dipped this morning, worried by the implications of immigration curbs that put the spotlight back on the risks of President Donald Trump’s protectionist bent.
The dollar had begun to climb at the end of last week after its worst month in five, as expectations of higher inflation and tax cuts to spur growth under the new president pushed U.S. government bond yields higher.
That was halted by a combination of weaker-than-expected economic growth data on Friday and the uproar that followed Trump’s order restricting entry to the United States for travellers from seven Muslim-majority nations.
Attention in Europe will focus on German inflation data at the start of a week dominated by central bank meetings in the United States, Japan and the United Kingdom.
Euro investors were also considering the implications of the selection of a more radical leftist candidate by the French Socialists for presidential elections in April.
Britain’s pound fell this morning, setting it on course for its first three-day fall against the dollar of the year and putting it on the back foot ahead of Thursday’s first Bank of England meeting of 2017.