By Lawrence White and Tom Westbrook

LONDON (Reuters) – Global stocks held close to record highs on Wednesday ahead of the release of results from chipmaker Nvidia, which leads the market for chips, while sterling remained near a two-and-a-half-year high as traders speculated that Britain would lag behind the United States in cutting interest rates.

The MSCI index of all global stocks rose 0.05 percent, approaching a record high hit earlier this month, as the turmoil of early August eased and there were signs that policymakers have begun to contain the worst rise in inflation in 40 years.

Europe’s benchmark STOXX index climbed 0.25% to a one-month high, boosted by technology stocks ahead of rosy expectations for Nvidia’s earnings update later in the day.

Nvidia’s market value has grown tremendously thanks to its dominance in the computer hardware behind artificial intelligence. Its share price has risen by around 3000% since 2019, and with a market cap of $3.2 trillion, a move in its share price has an impact on the broader market.

Second-quarter revenue is expected to have doubled, but even that is likely to disappoint expectations. Options prices show traders are expecting a swing of nearly 10% – or $300 billion – likely the biggest swing in earnings ever.

The results of the “so-called ‘most important company in the world'” stood between Wall Street and new record highs, noted Capital.com analyst Kyle Rodda, setting the tone for the sector.

“The company’s revenue and sales forecast is a barometer of AI capital spending, which can provide insight into the health of other major technology companies,” he said.

S&P 500 futures were steady during early European trading, while Nasdaq 100 futures fell 0.01 percent.

Shares in Australian gaming company Tabcorp were headed for their biggest drop since 2008, falling 17 percent to a four-year low after the company warned it would miss its profit targets due to compliance and other costs.

Debt and currency markets were stable in the Asian session, although the Australian dollar briefly hit its highest since January at $0.6813 after monthly inflation data came in slightly above market forecasts.

Globally, a weakening dollar amid anticipation of U.S. interest rate cuts has boosted most other currencies as markets expect U.S. short-term rates, currently above 5.25%, to fall the most.

The greenback held near its lowest level in over a year against a basket of parallel currencies, last trading 0.2 percent higher at 100.83, above its 13-month low of 100.51 hit in the previous trading session.

Interest rate futures are forecasting a 100 basis point U.S. rate cut this year, and last week Fed Chairman Jerome Powell endorsed the start of rate cuts, saying “the time has come.”

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This tone contrasts with the caution at the Bank of England, which has helped make the pound sterling the best-performing currency among the G10 currencies, with a gain of 4.1 percent since the beginning of the year.

On Tuesday, the price reached its highest level in more than two years at $1.3269 and fell to $1.3232 in European trading. (GBP/)

“In our view, the BoE is likely to cut interest rates only once per quarter in the future,” said Jane Foley, senior strategist at Rabobank, in a note. The Fed, on the other hand, predicts four consecutive rate cuts of 25 basis points each between September and January.

The interest rate markets remained stable. The yield on 10-year US government bonds was 3.82%, and the yield on 2-year bonds was 3.87%. The gap between the two bonds was the smallest it has been for almost three weeks.

Heavy selling pushed bitcoin down 4% against the dollar to $59,223. Gold held at $2,507 an ounce.

Oil prices gave up a recent rise as sentiment about Chinese demand turned gloomier, with Brent crude futures trading at $78.59 a barrel. (O/R)

(Reporting by Tom Westbrook and Lawrence White, editing by Jacqueline Wong and Bernadette Baum)