The Pound rose against a weaker Dollar on Monday, close to a three-month high, despite the gloomy UK economic outlook.

Sterling edged up 0.12% to $1.2103 in early Monday trade, not too far short of the $1.2153 mark hit on 24th November. Yet, against the Euro, the Pound declined 0.6% to 86.58 pence.

The findings of a survey published on Monday revealed UK property market activity coming to a standstill in October, as well as a slowdown in house price growth to the lowest quarterly level since February 2020.

In addition, the results of a retail survey by the Confederation of British Industry, due to be released on Monday, are set to show how consumers are coping with mounting inflation, Reuters reports.

According to analysts, the Pound’s direction over this week would probably be led by its peers due to a less volatile political situation. That said, worries over a prolonged recession in Britain continue to impact investor sentiment.

Moreover, the flash purchasing manager index (PMI) data out last week highlighted UK economic activity remained near 21-month lows, although the figures were marginally better than forecast by economists.

All eyes will be on statements happening this week from Bank of England governor Andrew Bailey on Tuesday and chief economist Huw Pill on Wednesday as to clues on the central bank’s next policy move.

According to a Reuters poll of economists, the Bank of England is forecast to hike rates by 50 basis points on 15th December to take the base rate to 3.50%.

The bank has been increasing rates since the end of last year in a bid to rein in inflation without impacting the UK economy too much.

“The BoE’s forecasts imply that the bulk of UK inflation will dissipate and that minimal further tightening is required,” stated Mizuho senior economist Colin Asher.