Pound above 2021 low against U.S. dollar ahead of Fed meeting

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Pound above 2021 low against U.S. dollar ahead of Fed meeting

LONDON, Dec 8 Reuters - The pound hovered above a 2021 low against the U.S. dollar, while investors stayed on the sidelines ahead of the U.S. data and a Bank of England policy meeting, which may keep interest rates on hold.

Money markets are assigning a 58% probability of a 15 bps rate increase next week, down from a nearly 70% probability two weeks ago.

The Bank of England may hold off on becoming the world's first big central bank next week to raise interest rates from their Pandemic lows due to the Omicron variant of the coronaviruses.

The pound was steady at $1.3241 against the dollar, not far from the low of last week's 2021 low below $1.321. The pound was 0.2% lower against the euro, at 85.20 pence.

The U.S Federal Reserve meets next week, with policymakers flagging in the run-up that an increase in the pace of the stimulus tapering was likely, which would set up the possibility of earlier rate rises.

The JOLTS report on U.S. job openings should provide further evidence of a tighter labour market, potentially adding fodder for bets on earlier Fed tightening.