LONDON, March 20 Reuters Sterling rose on Monday ahead of a key Bank of England BoE rate decision and inflation data due this week, while the Swiss governmentbacked takeover by UBS of Credit Suisse failed to soothe market nerves, weakening the dollar.

Global financial markets continue to be rattled by the collapse of some regional U.S. banks and the troubles of larger Swiss lender Credit Suisse.

With UK inflation data on Wednesday expected to show some easing and amid the global financial market instability, money markets are pricing in a 50 chance of no interest rate hike by the BoE on Thursday and the same chance of a 25 basispoint increase.

Sterling was 0.5 up on the U.S. dollar to 1.2240 after briefly touching its highest level against a weakening greenback in more than one week. It was flat against the euro at 87.55 pence.

Jeremy Stretch said inflation will give further clues but he still expects a 25bps rate hike by BoE. This comes as the BoE remains of the view that the banking sector remains well capitalized. The combination of factors suggests recent GBP resilience is set to remain in place, he said.

Economists polled by Reuters expected the yearonyear CPI inflation figure to fall to 9.9 in February from 10.1 in January.

Goldman Sachs said it sees no economic growth in Britain this year and no longer expects the BoE to hike its policy rate in May, leaving its terminal rate forecast for BoE at 4.25.

UK politics is also in focus. A member of the British…