LONDON, Nov 2 Reuters The pound edged higher on Thursday ahead of an interest rate decision from the Bank of England, while the dollar fell after the U.S. Federal Reserve held borrowing costs steady on Wednesday.

Sterling GBPD3 was last up 0.29 at 1.2185. The currency fell to a sevenmonth low of 1.2039 in early October and has since traded in a range just above that level.

Investors and economists expect the Bank of England to keep interest rates at a 15year high on Thursday and to signal that it plans to keep them at the current 5.25 level for an extended period.

Signs of a slowdown in much of the British economy have become clearer since the Bank held rates at its last meeting, although inflation remains stronger than in many other major economies.

The Fed on Wednesday held rates in the 5.25 to 5.5 range, their highest level in 22 years. Chair Jerome Powell said the central bank may need to raise rates again but was comfortable waiting to see whether the latest run of strong economic data continues.

Traders interpreted the Fed decision and Powell39;s comments as relatively dovish on inflation, leading U.S. bond yields to fall and bring the dollar down with them.

The dollar index , which tracks the greenback against its major peers, was last down 0.28 at 106.17.

It has traded sideways since hitting an almost oneyear high of 107.34 in early October on the back of a sharp rise in U.S. bond yields driven by strong economic growth.

Joe Tuckey, head of FX analysis at…