The Sterling strengthened against a weaker Dollar on Monday as traders shifted their focus to Britain and the Pound in anticipation of this week's Bank of England meeting and next week's update on the UK's public finances.

The Pound rose by 0.27% to $1.2973, nearing last week's four-month high. However, the gain was in line with other European currencies, as concerns over US economic growth continued to pressure the Dollar.

Against the Euro, the Pound edged up slightly to 84.05 pence, after falling sharply from around 82 pence per Euro in early March due to Germany's extensive spending plans.

While the Pound has mostly been influenced by events in Europe and the US, upcoming local developments are expected to play a more significant role in the coming weeks, Reuters reports.

“It would be fair to say that GBP has not been top of mind for investors since the February BoE meeting. Tariff talk, trade uncertainty and the German fiscal bazooka have dominated price action in both rates and FX,” said BofA analysts.

“Heading into the (next) BoE meeting, GBP should find some focus with a heavy schedule of events, culminating in the Spring Forecast on 26 March.”

They noted that the Pound's decline against the Euro has been “excessive” and believe the currency is poised for a rebound.

The Bank of England is set to meet on Thursday and is expected to keep interest rates unchanged. Investors will be closely watching for any signals from policymakers that could challenge market expectations of two additional 25 basis point rate cuts by the end of the year.

Wage data, set to be released on Thursday, will also play a role in shaping market expectations.

The following week, Chancellor Rachel Reeves will provide an update on the public finances, an event that investors warn could trigger another market shock for an economy that is becoming increasingly dependent on volatile foreign capital.