LONDON - The pound rose on Thursday ahead of a Bank of England rate decision, although trading was still mostly dominated by the reverberations of Donald Trump's win in the U.S. presidential elections that fuelled a huge dollar rally.

The BoE is widely expected to cut rates at this meeting, although what happens after that is less clear, after last week's high-tax, high-spend budget that economists see as inflationary.

Sterling was last up 0.46% at $1.2939, having posted its biggest one-day fall against the dollar since March 2023 the previous day, following Trump's clear win over Democrat rival Kamala Harris that prompted investors to dive into U.S. assets that are likely to benefit from the Republican's "America First" agenda.

Back in the United Kingdom, the pound and gilts came under fire last week after finance minister Rachel Reeves delivered her first budget, which contained 40 billion pounds ($51.74 billion) in tax rises, as well as an increase in spending of around 70 billion pounds in the coming five years.

The Office for Budget Responsibility, Britain's official budget forecaster, believes growth but also inflation will rise more quickly over the coming few years.

Consumer prices look to rise by 2.6% in 2025, according to the OBR's forecasts, considerably above the BoE's 2% target, largely because of the budget.

"In our view, the OBR projections are way too optimistic. It's the monetary policy report month, and it would be interesting to see if the BoE projections differ from the OBR," Jefferies strategist Mohit Kumar said.

The OBR's projection was a big reason why investors have reeled in their bets on repeated interest-rate cuts next year.

Inflation in Britain has proven to be stickier than in other economies, with wage growth and service-sector prices in particularly showing resilience.

Money markets currently show traders are pricing in half a point in rate cuts over the coming three meetings, in line with expectations for the Federal Reserve, but below the almost-full percentage point from the European Central Bank over its next three meetings.

"For the pound, there is a particular risk that the BoE will be perceived as more dovish than before," Commerzbank strategist Antje Praefcke said.

"The new forecasts and any indications of future interest rate cuts are likely to be more interesting," she said.

UK rates remaining higher for longer and then falling more slowly than elsewhere has been a key driver of sterling strength this year.

The pound is the best-performing major currency against the dollar, with a year-to-date gain of 1.65%. ($1 = 0.7730 pounds)

(Reporting by Amanda Cooper; Editing by Angus MacSwan)