The Pound moved up on Thursday ahead of policy decisions being announced by the Bank of England and European Central Bank, with investors eager to see whether the impact of the Omicron variant affects the BoE’s decision, despite a steep hike in inflation.

The Dollar edged down after the Federal Reserve’s announcement on Wednesday saying it would double the speed of its bond buying tapering.

Elsewhere, the European Central Bank looks set to reduce stimulus further on Thursday, whilst vowing to maintain borrowing costs at exceptionally low figures.

The Pound rose 0.15% at 85.05 pence against the Euro, and 0.2% higher at 1.3291 against the Dollar, Reuters reports. Early Thursday trade remained subdued as investors awaited the Bank of England’s meeting getting underway at 12:00 GMT, and the European Central Bank at 12:45 GMT.

"If the BoE were to hike its key rate in a surprise move today, that would be positive for Sterling," according to Commerzbank analysts in a note to clients. Yet they went on to say: "BoE comments suggest that it will allocate more significance to the pandemic at today’s meeting."

Hospital admissions are increasing in certain areas of the UK as the Omicron variant has led to a surge in new cases, according to England's Chief Medical Officer Chris Whitty, who cautioned that case numbers would exceed records in the coming weeks.

Whitty told a news conference: "I'm afraid we have to be realistic that records will be broken a lot over the next few weeks as the rates continue to go up.

"The rates have remained reasonably flat over quite a while reflecting where we've been with Delta (variant) over the last several weeks … but they are beginning to increase in some places, particularly in London,” he added.

If the Bank of England doesn't increase rates, the Pound's reaction "will depend on how concerned BoE sounds about the question of inflation and whether it signals a February rate hike," Commerzbank continued.