The British Pound held near multi-month lows on Thursday as investors awaited the Bank of England’s interest rate decision, with markets pricing in a one-in-three chance of a rate cut, though most analysts expect no change.

Sterling inched up 0.1% to $1.3066 ahead of the decision at 1200 GMT, after slipping to a seven-month low of $1.3011 on Wednesday.

Against the Euro, the Pound eased slightly, while the single currency rose 0.1% to 88.14 pence, having reached its strongest level since May 2023 the previous day.

Traders are now pricing around a 32% probability of a rate cut, a sharp increase from near-zero expectations only a few weeks earlier.

That shift has been supported by comments from Chancellor Rachel Reeves, who signalled potential tax increases that could slow economic growth.

Reeves, speaking on Tuesday, prepared the ground for widespread tax rises to prevent a return to “austerity,” describing her upcoming 26 November budget as one requiring “hard choices” to sustain public services while lowering the nation’s debt.

What once appeared to be a decisive vote to keep the Bank Rate unchanged at 4.0% now looks more finely balanced, after inflation came in flat in September and labour market data was interpreted by Governor Andrew Bailey as showing easing price pressures.

Adding to expectations, Goldman Sachs shifted its outlook last week and is now forecasting a rate cut.

“Today, we see the BoE on hold despite mounting speculation of a pre-Budget cut,” said Francesco Pesole, FX strategist at ING.

“We think there are some upside risks for Sterling today as markets may not receive clear signals towards a December move.”

Most economists surveyed by Reuters last month forecast a 6-3 vote by the MPC in favour of keeping the Bank Rate on hold.