Counting down the minutes to the Bank of England (BOE) policy meeting, investors remained cautious with the pound remaining stable against the US dollar in the European session.
The BOE is widely expected to raise interest rates by 50 basis points after Governor Andrew Bailey signaled that such a hike would be considered at an upcoming meeting.
If the central bank actually raises rates by half a basis point, it will be the first since 1997.
However, follow-up statements from the central bank and Bailey after the decision will be scrutinized by investors who fear that the BOE will take similar steps to the Federal Reserve (Fed) and the Reserve Bank of Australia (RBA).
The Fed and RBA have started to signal that they will slow down their tightening after taking aggressive steps in raising interest rates.
Meanwhile, the US dollar traded slightly lower with the dollar index hovering around the price of 106.20 as investors' attention is now focused on the publication of the US NFP employment data.
Overall, risks in the market are seen to continue to recover as investors shift focus away from the Taiwan issue sparked by US House Speaker Nancy Pelosi's visit.
