LONDON, Sept 13 (Reuters) - The British pound gained slightly on Friday, adding to Thursday's rise off a three-week low against the dollar, as the focus shifted to next week's UK inflation data and central bank meeting.

Sterling edged up on the day at $1.3146, just above the $1.3127 it reached on Thursday, when it closed 0.6% higher.

The Bank of England is widely expected to keep interest rates on hold next week, with futures markets implying around an 80% chance that rates remain unchanged, after a 25 basis-point rate cut last month.

"We expect the MPC to maintain Bank Rate at 5.00% on 19th Sept meeting and expect the Committee to opt to maintain the current £100bn pace of stock reduction," analysts at Goldman Sachs said, referring to the Monetary Policy Committee.

The next key input for the BoE will be UK inflation data released on Wednesday, the day before its policy announcement.

On Wednesday this week, data from Britain's Office for National Statistics showed the UK economy stagnated in July, sending the pound to its lowest since Aug. 20. A Reuters poll of economists had forecast a 0.2% month-on-month expansion.

The British economy has however still shown more solid growth than the euro zone since the beginning of the year.

Against the euro , the pound was flat at 84.42 pence.

The European Central Bank lowered interest rates by 25 basis points on Thursday and signalled a "declining path" for borrowing costs in the months ahead as inflation slows and economic growth in the euro zone dwindles.

Meanwhile, media reports reignited speculation about an outsized Federal Reserve rate cut next week.

Goldman Sachs analysts expect the BoE's Monetary Policy Committee to reevaluate its cautious approach later this year, seeing "compelling reasons for the MPC to accelerate the pace of easing as wage pressures moderate and underlying services inflation falls back."

They also anticipate sequential rate cuts from November until Bank Rate reaches 3% in September 2025.

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https://www.reuters.com/markets/currencies/sterling-slightly-up-ahead-uk-inflation-data-boe-meeting-next-week-2024-09-13/