January 22, 2020 / 8:51 AM / a month ago

Sterling firms to near two-week high vs euro as rate-cut talk abates

* Graphic: World FX rates in 2019 tmsnrt.rs/2egbfVh

* Graphic: Trade-weighted sterling since Brexit vote tmsnrt.rs/2hwV9Hv

LONDON, Jan 22 (Reuters) - Britain’s pound rose to its strongest level against the euro in almost two weeks on Wednesday as investors debated whether or not the Bank of England will cut interest rates when it meets next week.

Data on Tuesday showed the British economy created jobs at its strongest rate in nearly a year in the three months to November, possibly weakening the case for an imminent rate cut and boosting sterling.

In early Wednesday trade, the pound firmed to its strongest level against the euro in almost two weeks at around 84.81 pence , building on gains seen the previous session.

Sterling was steady at around $1.30.

It has weakened almost 2% versus the dollar since the start of the year as dovish comments from Bank of England officials and weak data fuelled expectations for a near-term rate cut.

Money market pricing suggests, investors attribute around a 60% chance of a quarter point rate cut at the Jan. 30 BoE meeting.

For many now the key focus is Friday’s January purchasing managers’ index - widely viewed as a forward-looking indicator that could swing the rate debate one way or another.

“I struggle to make a strong case for a January rate cut,” said Kallum Pickering, a senior economist at Berenberg in London.

“Much of the data, which is weak, is pre-election so what will matter more to the Bank of England is the PMI data on Friday.” (Reporting by Dhara Ranasinghe)

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