Ray V
SINGAPORE (Reuters) – The British pound remained broadly stable on Thursday ahead of the Bank of England’s (BoE) interest rate decision later in the day, while the dollar struggled ahead of further market catalysts.
Currencies traded in narrow ranges after the US holidays, with investors keeping an eye not only on the Bank of England, but also on the decisions of the central banks of Switzerland and Norway.
Sterling last bought $1.2719 after rising slightly in the previous session, while the euro was up 0.03% at $1.0747.
The dollar fell 0.05% against the yen to 157.99, although the Japanese currency remained close to a one-month low of 158.255 per dollar hit last week.
Against a basket of currencies, the dollar was little changed at 105.23, some distance from last week’s one-month high.
The Bank of England is expected to keep rates steady on Thursday, with the focus on forecasts for how soon the easing cycle could begin.
While 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 persistent underlying price pressures, ruling out chances of an early rate cut.
“There’s no question they’re holding rates steady,” said Tony Sycamore, market analyst at IG. “The headline inflation data may have been a welcome relief, but there were yet again surprises in the services sector.
“Potentially they could open the door at the next meeting, but I still feel like I’m only two meetings away from a potential rate cut.”
However, the Swiss National Bank (SNB) is expected to cut its key rate by 25 basis points for the second meeting in a row, and the recent strengthening of the Swiss franc and favorable domestic inflation strengthen the case for looser monetary conditions.
The latter was at 0.8840 per dollar, hovering near a three-month high.
The Swiss franc also held close to a four-month high of 0.94785 per euro hit in the previous session as the single currency continued to come under pressure from political turmoil in France and the bloc.
“The Swiss currency has performed quite well against the euro and inflation in Switzerland is declining, so again, the strength of the Swiss currency does not fit very well with the idea that you want to push inflation up a little bit,” Rodrigo Catril said. , Senior Currency Strategist at National Australia Bank (OTC:).
In other currencies, the price rose 0.01% to $0.6673, while the New Zealand dollar stabilized at $0.6131.
Data on Thursday showed New Zealand’s economy grew faster than expected in the first quarter but remained weak. This did little to change the market’s views on the country’s rate outlook.