The Dollar reached a four-week high against major rivals on Thursday following buoyant labour market data on Wednesday, whilst Sterling edged down ahead of the Bank of England meeting.

The Pound declined 0.1% to $1.27 at the time of writing, whereas on Wednesday dipped to a four-week low of $1.2680.

The Bank of England is scheduled to make a monetary policy announcement on Thursday, during which it is expected to hike rates by 25 basis points to a 15-year high of 5.25%. This would be the 14th consecutive increase within the central bank’s current tightening cycle.

“The market is divided because the expectation for the economy is on the weak side, but high inflation and a hawkish bias from the BOE have supported Sterling,” according to Niels Christensen, chief analyst at Nordea.

“An outside bet of a 50-basis-point hike would be a surprise and would lead to a stronger Pound,” Christensen went on to say.

In the US, data published on Wednesday revealed private payrolls increased more than forecast last month, whilst longer-dated US Treasury yields moved higher, and the Dollar received a boost on the Treasury’s plans to increase the size of government bond auctions in Q3.

“Data out of the US continues to be stronger than expectations. The employment situation is still very good,” Christensen stated.

“Rate differentials continue to move in favour of the Dollar as US rates have been firmer than European rates,” he added.

The Dollar index – measuring the greenback against six major rivals – increased to 102.84, a four-week high. At the time of writing, it was 0.1% up at 102.73, prolonging Wednesday’s 0.5% increase.

In addition, the Euro was 0.2% lower at $1.0922, the Australian Dollar declined to a two-month low of $0.6522, whilst the New Zealand Dollar fell to its lowest since the end of June at $0.6065, after falling over 1% on Wednesday.