06:31 AM EDT, 06/19/2025 (MT Newswires) -- Sterling (GBP) has been trading on a softer footing heading into this week's Bank of England Monetary Policy Committee (MPC) meeting, said MUFG.

The BoE will release the policy decision at 7 a.m. ET Thursday.

EUR/GBP has risen for seven consecutive trading days while cable's upward momentum has stalled just below the 1.3600 level. The bank expects sterling to weaken further if there are three dissenters in favor of a rate cut at Thursday's MPC meeting.

However, the scale of the sterling sell-off would be curtailed if there is no significant change in tone or guidance indicating that the BoE remains comfortable maintaining the current quarterly pace of rate cuts, stated MUFG.

The United Kingdom rate market is already almost fully priced for two further 25bps cuts by year-end, wrote the bank in a note to clients. It would still leave rates in the U.K. amongst the highest on offer among G10 currencies.

Foreign exchange ,volatility has also eased over the last couple of months providing a more supportive backdrop to rebuild carry trades and providing support for sterling, it added.

The main risk for a bigger sterling sell-off in the near term would be a more disruptive outcome for financial markets and the global economy from escalating tensions in the Middle East, according to MUFG.