The Pound strengthened against a weaker Dollar on Monday, ahead of the Bank of England's upcoming policy decision later this week.

At the time of writing, Pound Sterling was up 0.29% against the Dollar, trading at 1.33045, reflecting broader trends in the currency markets.

With a bank holiday in Britain, news flow was light, and there were few significant domestic events until the Bank of England's meeting on Thursday, Reuters news agency reports.

The Bank of England is widely anticipated to cut rates by another 25 basis points to 4.25%, but attention will be on the accompanying statement.

Some investors believe the BoE may need to speed up its gradual rate-cutting approach due to the impact of Trump’s tariffs on global growth.

“We anticipate the BoE will downgrade its GDP forecasts due to the trade war,” according to Samara Hammoud, a currency strategist at Commonwealth Bank of Australia (CBA) in a note to clients, going on to say that she forecasts the central bank would remain with a gradual interest rate cutting cycle as inflation continues to remain elevated.

“There is a risk the BoE may remove the reference to a 'gradual' cutting cycle,” Hammoud stated, which may result in the markets potentially pricing in additional cuts from the Bank of England, leading GBP/USD to fall closer to support at 1.3127.

Markets are pricing in at least two more 25 basis point rate cuts from the Bank of England this year, in addition to Thursday's expected move, with a strong possibility of a third cut.

Furthermore, the US Federal Reserve is also meeting this week, with expectations that it will keep rates unchanged on Wednesday following a strong March payrolls report.

Sterling traded slightly lower against the Euro, at 85.26 pence to the single currency.