The Pound rose against the Dollar on Wednesday ahead of the policy announcements by the Federal Reserve and Bank of England to curb red-hot inflation.

The Fed is meeting on Wednesday and the BoE on Thursday, with investors eyeing indications of the trajectory of future rate hikes.

It’s forecast that both the Fed and BoE will increase interest rates by 75 basis points at this week’s meetings, Reuters reports.

The greenback weakened in early European trade on Wednesday, bolstering currencies such as Sterling, on markets betting the Fed would indicate a slowdown in tightening in future.

The Pound rose 0.1% against the Dollar to $1.14990, whilst against the Euro the Pound edged down 0.1% to 86.08 pence.

According to currency analysts, the Federal Reserve meeting would probably set the tone ahead of the Bank of England’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),” according to currency analyst at MUFG, Lee Hardman.

“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.”

In addition, markets are looking at whether the Bank of England will suggest it may not be required to increase rates as fast as originally thought, Hardman went on to say.

The Pound has rallied since falling to an all-time low of $1.03270 at the end of September, fuelled by the massive tax-cutting plans of former prime minister Liz Truss’s government.

Since then, the currency has made broad gains against the Dollar, boosted by Rishi Sunak moving into Number 10.