LONDON, Sept 18 - The pound was steady against the dollar on Tuesday as traders looked to the Bank of England to see if it would follow the U.S. and euro zone authorities in cutting interest rates.
On Monday, the U.S. Federal Reserve and the European Central Bank cut their benchmark interest rates by half a point in a bid to shore up confidence after last week's attacks on the U.S. The Canadian, Swiss, the Swedish and Danish authorities have also eased monetary policy. Analysts said this round of monetary easing by so many other central banks had greatly increased the likelihood that the BOE would also cut its benchmark rate by 50 basis points despite Governor Sir Edward George's statement last week that coordinated rate cuts were "extremely unlikely".
"It's all eyes on the BOE to see what they will do. There had been some disappointment they didn't follow the Fed and the ECB yesterday," said Kamal Sharma, currency strategist at Commerzbank.
At 0727 GMT, the pound was trading around $1.4656 , virtually unchanged from its New York close and more than a cent away from the 7-1/2 month high it posted on Friday.
Against the euro, sterling was trading at 62.83 pence per euro , about a quarter percent higher than the New York close as it followed the dollar.
British inflation figures for August are due at 0830 GMT. They are expected to show underlying inflation, or RPIX, rose to 2.4 percent last month from 2.2 percent in July as a sharp fall in petrol prices last year was not repeated in 2001.
"I don't think the RPI data will get much reaction. We know inflation is not a problem and there's a lot of other things to worry about," said a trader at a U.S. bank. Analysts said the pound's fortunes were more likely to be dictated by international events such as any sign of U.S. retaliation for the attacks on it last week.
Earlier, the dollar took a small hit after Afghanistan's ruling Taliban government announced a holy war on the U.S.
"The Taliban declaration has unsettled the market and we'll still have to see the effect it has on U.S stocks," said Sharma.