(Updates prices)<\/p>\n
Sept 21 (Reuters) – Sterling held near four-week lows on Tuesday as investors evaluated the direction the Bank of England would take at an upcoming policy meeting, while broader risk sentiment remained under pressure due to Chinese property company Evergrande\u2019s debt troubles.<\/p>\n
In late London trading, the pound gave up all its earlier gains to trade flat on the day at $1.3664, slightly higher from Monday\u2019s low of $1.364 – its weakest level since Aug. 23. Some analysts cited the next support for the pound at its August low of $1.3602.<\/p>\n
The pound also received some support from a record $137 billion demand for its first \u201cgreen\u201d government bond amounting to $10 billion.<\/p>\n
In an important week for monetary policy, the Federal Reserve and BoE are among a dozen central banks hosting their meetings, which kept major currencies confined to their well-trodden ranges.<\/p>\n
The overall market mood is cautious about potential economic repercussions from Evergrande\u2019s debt problems.<\/p>\n
The pound was caught up in the sell-off across financial markets on Monday, while weak data tempering hawkish BoE expectations ahead of Thursday\u2019s monetary policy meeting had added to the currency\u2019s woes.<\/p>\n
Though no rate hikes are expected from the BoE until early 2022, investors had begun pricing in an end to the bank\u2019s pandemic-era stimulus and sought commentary on policy tightening.<\/p>\n
\u201cWe believe that what\u2019s currently priced in for the BoE is in general too optimistic,\u201d said Esther Reichelt, foreign exchange and emerging markets analyst at Commerzbank.<\/p>\n
Sterling will not appreciate by much, she added, saying that the first rate hike in six-months \u201cseems quite early given high uncertainties around the development of inflation and the pandemic, as well as possible Brexit fallout.\u201d<\/p>\n
The central bank will have to take into account the recent batch of economic data that showed retail sales eased for the fourth straight month in August, while inflation jumped, with rising gas prices expected to add to price pressures.<\/p>\n
Against the euro, the British currency was slightly stronger at 85.90 pence, but still hovered around a two-week low.<\/p>\n