Sterling moved higher on Monday, ending a three-week dip against the Dollar as the currency was bolstered by policymakers’ hawkish comments.

The Bank of England hiked interest rates by 0.25% last week, trailing increases by the Federal Reserve and other central banks, whilst markets forecast an 80% chance of a half-point rise next month, and predict around 100 basis points of tightening by September, Reuters reports.

The Bank of England’s chief economist, Huw Pill said last week that the central bank’s message it may have to act "forcefully" on interest rates depends on inflationary pressures.

"A number of factors point to Pound weakness at the moment but supported Bank of England rate expectations have provided a floor for now, and the Pound is stabilising at the centre of the 1.20-1.25 area," stated ING strategists.

The Pound rose 0.1% against the Dollar at $1.2236, following three straight weeks of losses. Last week Sterling declined to a March 2020 low of $1.1934.

Elsewhere, the Euro edged up on Monday by 0.2% against the Dollar to $1.05155, as French President Emmanuel Macron lost an absolute majority in the parliamentary election on Sunday.

"Even though a Macron presidency and majority in Parliament would be very positive for eurozone cooperation and so forth, it's more for the long term, it's not something that affects markets here and now," according to Ingvild Borgen Gjerde, FX analyst at DNB Markets. "There's two things that are very important to the Euro: What sort of anti-fragmentation tool the ECB can come up with, and the outlook for monetary policy."

In addition, the Dollar index – measuring the currency against six peers – declined 0.25% to 104.44, yet stayed near to a 20-year high of 105.79 reached last Wednesday, as the Federal Reserve hiked rates in a bid to curb soaring inflation.