The pound remains stable awaiting the BdE’s decision; the dollar falters against the yen

The pound remains stable awaiting the BdE’s decision; the dollar falters against the yen
The pound remains stable awaiting the BdE’s decision; the dollar falters against the yen

Sterling held steady on Thursday ahead of the Bank of England’s (BoE) interest rate decision later in the day, while the dollar retreated ahead of fresh market catalysts.

Currencies were trading in tight ranges after the holiday in the United States and while investors were not only awaiting the BoE, but also the decisions of the central banks of Switzerland and Norway.

The pound was last trading at $1.2719, having eked out a slight gain in the previous session, while the euro rose 0.03% to $1.0747.

The dollar fell 0.05% against the yen, to 157.99, although the Japanese currency did not move too far from the more than one-month low of 158.255 per dollar reached last week.

Against a basket of currencies, the greenback was little changed at 105.23, some distance from the one-month high reached last week.

The Bank of England is expected to keep rates steady on Thursday, with focus on any guidance on how soon an easing cycle could begin.

Although data on Wednesday showed British inflation returned to its 2% target in May for the first time in almost three years, details of the report pointed to the persistence of underlying price pressures, ruling out chances of a early rate cut.

“There’s no doubt they’ll hold rates,” said Tony Sycamore, market analyst at IG. “The headline inflation numbers were probably a welcome relief, but again there were upside surprises in the services components.

“They could potentially open the door at the next meeting, but it still looks to me like we’re two meetings away from a possible rate cut.”

However, the Swiss National Bank (SNB) is expected to cut its policy rate by 25 basis points for the second meeting in a row, as recent strength in the Swiss franc and benign domestic inflation add to the case for higher rates. looser monetary conditions.

The Swiss franc was last at 0.8840 per dollar, hovering around a three-month high.

Similarly, the Swiss franc held close to a four-month high of 0.94785 per euro hit in the previous session, as the common currency remains pressured by political turmoil in France and the broader bloc.

“The Swiss franc has performed quite well against the euro, and inflation has been coming down in Switzerland, so again, the strength of the Swiss franc doesn’t play well into this idea that you want to get inflation a little bit higher.” said Rodrigo Catril, senior currency strategist at National Australia Bank.

Elsewhere, the Australian dollar rose 0.01% to $0.6673, while the New Zealand dollar stabilized at $0.6131.

Data on Thursday showed the New Zealand economy grew more than expected in the first quarter but remained weak. That did little to alter market views on the country’s rate outlook.

 
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