Sterling edges down ahead of Bank of England rate decision

By Greta Rosen Fondahn

Feb 6 (Reuters) - Sterling dipped against the dollar on Thursday, as investors awaited the outcome of the Bank of England's meeting later on, at which the central bank is widely expected to cut rates.

Markets price in a 94% chance the BoE will cut rates by 25 basis points to 4.5% on Thursday, after which investors do not see a second easing until June.

The Bank will also publish its latest projections for the economy.

The pound was trading 0.2% lower against the greenback GBP=D3 at $1.2478, having touched a four-week high at $1.255 the day before.

Sterling edged down less than 0.1% against the euro EURGBP=D3 ahead of the BoE's decision.

Investors worry about a stagnating British economy, but domestic price pressures remain hot, limiting the central bank's scope to act.

"While the Monetary Policy Committee may wish to ease more rapidly, sticky inflation doesn't permit them to do so yet, and will likely also prevent any kind of dovish pivot at this stage," said Michael Brown, senior research strategist at Pepperstone.

Markets expect the BoE to cut rates three times in 2025, and price in a total 82 bps of easing this year.

(Reporting by Greta Rosen Fondahn; Editing by Amanda Cooper)

((Greta.RosenFondahn@thomsonreuters.com))