On Tuesday, the value of the pound dropped by 0.3% against the dollar to $1.2457 and by 0.1% against the euro to 87.91 pence. This decline came despite some

positive data on the UK's economy, including an increase in UK house prices and record high food prices.

However, investors were more concerned about the Reserve Bank of Australia's unexpected rate hike and its impact on UK rates compared to others. Money markets predict that the Bank of England will increase rates by 0.25% to 4.50% on May 11th and then again to almost 4.90% by November, a view that some analysts, such as those at ING, do not agree with.

Despite being one of the best-performing major currencies against the dollar this year, largely due to the pound's poor performance last year, the pound's value could remain stable this week due to the Federal Reserve and the European Central Bank meeting to discuss policy. Photo by PPP, Wikimedia commons.