LONDON - The British pound nudged higher on Wednesday against a broadly weaker dollar, as investor focus remained on the Bank of England policy meeting on Thursday, at which the central bank is expected to raise rates for the sixth consecutive time.

Money markets are currently pricing in a greater than 90% chance of an outsized 50 basis point rate hike at Thursday's meeting, according to Refinitiv data, as the central bank attempts to cool inflation from a four-decade high of 9.4%.

More than 70% of 65 analysts and economists surveyed by Reuters also expect a half-point increase from the bank's Monetary Policy Committee this week, a poll conducted between July 27 and Aug. 1 found.

But analysts said the pound was largely being driven by risk sentiment and external factors ahead of the policy meeting.

"In the run-up to Thursday’s Bank of England meeting, the pound is trading in line with wider market moves," said Simon Harvey, head of FX analysis at Monex Europe.

At 0847 GMT, sterling was up 0.13% against the dollar at $1.21735, below a one-month high of $1.22915 reached on Monday.

Against the euro, it was down 0.10% to 83.65 pence, just off Tuesday's 15-week high.

ING analysts noted some Bank of England (BoE) members have highlighted the pound has a role to play in monetary policy settings, and trade-weighted sterling has risen 3% from its lows in July.

"With gas prices staying high and the dollar likely to stay strong, arguably the BoE would prefer a stronger pound now," they said in a note.

Meanwhile, survey data confirmed Britain's services sector activity grew in July at the slowest pace since early 2021 when the country was under a coronavirus lockdown, although there was an easing of price pressures.

(Reporting by Samuel Indyk Editing by Mark Potter)