The British pound rose in European trading on Tuesday against a basket of global currencies, extending gains for the second consecutive session versus the U.S. dollar and hitting its highest level in ten weeks. The move was supported by ongoing selling of the U.S. currency in the foreign exchange market.

The Bank of England meets on Thursday to discuss appropriate monetary policy tools for the U.K. economy, with markets fully expecting rates to remain unchanged.

To reassess expectations for rate cuts later this year, investors are awaiting key U.K. labor market data due later today.

Price Overview

The pound rose 0.2% against the dollar to $1.3625, its highest since July 8, from an opening level of $1.3598, after touching a session low of $1.3597.

On Monday, the pound gained 0.3% versus the dollar, its third advance in four sessions, supported by weakness in the greenback and U.S. Treasury yields.

U.S. Dollar

The dollar index fell 0.2% on Tuesday, extending its decline for a second straight session to hit a two-month low at 97.16, reflecting continued weakness in the U.S. currency against a basket of global peers.

This decline is driven by active selling ahead of an expected Federal Reserve decision on Wednesday to cut interest rates by 25 basis points.

At the same time, U.S. President Donald Trump has been ramping up pressure on Fed policymakers to deliver deeper cuts. In a Monday social media post, he urged Fed Chair Jerome Powell to implement a larger reduction in the benchmark rate, citing risks facing the U.S. housing market.

U.K. Interest Rates

The August vote on cutting rates revealed a clear split among Bank of England members over the future path of policy easing.

The Bank meets this week to address recent economic developments, particularly growing concerns over financial stability.

Current market pricing suggests less than a 20% probability of a 25-basis-point rate cut at Thursdays meeting.

U.K. Labor Market

To reassess prospects for policy easing this year, investors are watching key labor data due later today, including August jobless claims, the unemployment rate, and July average earnings.

Pound Outlook

Analysts at FX News Today noted: If U.K. labor data proves less aggressive than markets anticipate, expectations for a rate cut in November will rise, which could place negative pressure on the pound.