By Medha Singh

LONDON (Reuters) – The pound held near a one-month low against the dollar on Monday ahead of wage growth and inflation data this week that could help shape the Bank of England’s next move at its policy review meeting next month.

Sterling was little changed at $1.30660, near last week’s one-month low of $1.30110, and flat against the euro at 83.70 pence.

The pound is about 2.8% below its two-and-a-half year high hit in late September as markets pared back bets on a jumbo size interest cut from the U.S. Federal Reserve.

Expectations that sticky inflation would keep the BoE on a gradual interest rate cut path relative to its peers – the Federal Reserve and the European Central Bank – had underpinned the pound’s outperformance this year.

Money markets currently see an 85% chance of a 25 basis point interest rate cut from the BoE’s November policy meeting, and are evenly split about another cut by the end of the year. [IRPR]

Meanwhile Prime Minister Keir Starmer is hosting some of the world’s biggest businesses at a conference on Monday, where he will vow to scrap regulation that holds back growth and investment.

The investment summit, which the government is hoping to use to attract tens of billions of pounds of investment, is not likely to have a big impact on the pound, ING head of markets Chris Turner said in a note.

Instead, data on British pay growth on Tuesday and the consumer prices report on Wednesday could have “a decent say in the pricing of the Bank of England’s easing cycle and sterling”, Turner said.

If the UK September services CPI drops back as consensus expects, the EUR/GBP could hold support at 0.8350 this week and retest the recent high at 0.8435, while GBP/USD could press the 1.3000 area, Turner said.

Investors were also nervous ahead of the Labour Party’s inaugural budget when finance minister Rachel Reeves is likely to announce tax hikes to ease the government’s budget shortfall.

A Deloitte survey showed optimism in large British companies softened ahead of the annual budget, in line with most other gauges of business and consumer confidence which point to a fall in sentiment ahead of Oct. 30.

The ECB rate decision and the U.S. retail sales report, both due on Thursday, are key events that could influence broader markets this week.

(Reporting by Medha Singh; Editing by Jan Harvey)