The GBP/USD currency pair traded in proximity to a 10 1/2-week high of 1.3671 on Wednesday ahead of the outcome of the Federal Reserve’s and the Bank of England’s policy meetings.

The Bank of England is expected to keep its benchmark interest rate intact at 4% at its September 18th meeting.

In August, the BoE lowered its key rate by 25 basis points to 4% – the lowest rate since March 2023.

August’s decision came after a rare two-round vote that revealed sharp divisions over how to cope with sticky inflation and a softening economy.

Five of the nine policy makers supported a 25 basis point rate cut, while four voted for leaving rates on hold.

It was the first time in the BoE’s history that two votes were required to reach a majority on interest rates.

BoE Governor Andrew Bailey said it was a “finely balanced” decision and reiterated that future rate cuts would be “gradual and careful.”

Meanwhile, the Fed is widely expected to lower its federal funds rate target range by 25 basis points to 4.00%-4.25% at its September meeting.

Markets are also pricing in a 4% chance of a super-sized 50 basis point cut.

In July, the Fed kept borrowing costs without change, but two governors dissented in favor of a rate cut, which has been the first such dual dissent since 1993.

And, the minutes from the Fed’s meeting in July showed that most policy makers remained more concerned about persistent inflation pressures than about labor market risks.

Investors will also be paying close attention to the press conference with Fed Chair Jerome Powell for clues over the timing of future interest rate cuts as well as to the new set of FOMC economic forecasts.

The GBP/USD currency pair was last down 0.10% on the day to trade at 1.3631.