Investing.com – The U.S. dollar rose while sterling fell on Thursday ahead of the Bank of England’s latest policy meeting.
At 0400 ET (0900 GMT), the dollar index, which tracks the greenback against a basket of six other currencies, was trading 0.2% higher at 105.122, nearing last week’s one-month high of 105.80.
The dollar rises in price after the holidays
The US currency rose on Thursday as traders returned to the US after the holiday.
The U.S. economic data slate includes numbers and data later in the session as investors look for more clues about when the Federal Reserve will begin cutting interest rates.
Several Fed officials expressed caution about cutting rates too early, wanting more evidence that inflation has been tamed before the central bank agrees to ease monetary policy.
“There appears to be simply not enough credibility in the data to trigger a dovish turn in communication, but the forward-looking nature of markets means data remains more important than Fed speeches, and the 50bp cut envisaged for year-end reflects cautious optimism on disinflation,” ING analysts said in a note.
Sterling fell ahead of Bank of England meeting
fell 0.1% to 1.2699 ahead of the Bank of England’s latest decision later in the session.
The central bank is expected to keep interest rates unchanged even after data released earlier this week showed the annual interest rate fell to 2.0%, in line with its medium-term target.
That marked a sharp decline from a 41-year high of 11.1% reached in October 2022, but wage growth and underlying price pressures remain a challenge for the central bank.
fell 0.2% to 1.0718, with political unrest in the region continuing to weigh on the single currency.
The European Commission said on Wednesday that France and six other countries should be punished for budget deficits exceeding EU limits, with a deadline for deficit reduction to be set in November.
It comes after French President Emmanuel Macron called early elections following his party’s poor performance in European Parliament elections, throwing the EU’s second-largest economy into political instability.
fell 0.7% to 0.8901 after cutting the key interest rate by 25 basis points, continuing the cycle of rate cuts after the March cut.
This decision was well-considered given the recent recovery in economic growth and the reversal of the gradual decline in inflation in Switzerland.
Yen remains weak
In Asia, shares traded 0.2% higher at 158.44, trading at a one-month high, with the yen continuing to show weakness after the Bank of Japan took a relatively dovish stance on bond purchases at its recent policy meeting.
traded 0.1% higher at 7.2604, with the Chinese yuan remaining under pressure amid doubts about the effectiveness of the country’s economic recovery.