LONDON (Reuters) -The British pound was steady on Thursday after a report said that U.S. President Donald Trump was set to announce a trade deal between the U.S. and Britain, with the market’s focus turning to an expected rate cut from the Bank of England later in the day.
Sterling initially climbed 0.5% against the dollar after the New York Times report on a possible trade deal before trimming gains to trade flat on the day at $1.3287 as of 0645 GMT.
The BoE is widely expected to cut its main interest rate by 25 basis points to 4.25% later on Thursday, with investors almost fully pricing in three additional rate cuts by the end of the year, which would take the benchmark rate to 3.5%.
“We think the vote count, forecasts, updated scenarios, and forward guidance will err on the more dovish side,” said Sanjay Raja, senior economist at Deutsche Bank.
Much has changed since the BoE’s last monetary policy report in February, including Trump’s proposals for global tariffs, embroiling the UK and other major trading partners in a trade war.
A trade deal with the U.S. would be the second for Britain in a week after it clinched a free trade pact with India.
(Reporting by Samuel IndykEditing by Bernadette Baum)
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