Dollar Rises Higher, Pound Sterling Drops Ahead of BOE Meeting By

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LYNXMPECA81RF M – The US dollar rose higher on Thursday while the pound moved lower ahead of the Bank of England’s latest policy-setting meeting.

At 04:00 ET (09:00 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was trading 0.2% higher at 105.122, on its way to last month’s high of 105.80 .

Dollar rises after holiday

The US currency rose on Thursday after traders returned from a holiday in the United States.

The US economic data series will feature numbers and dates later in the session, as investors look for more clues about when the Federal Reserve will start cutting interest rates.

Some Fed officials have expressed caution about expecting rate cuts too early. They sought more evidence that inflation is under control before the central bank would agree to ease monetary policy.

“It appears there simply isn’t enough confidence in the numbers to trigger a dovish turn in communications, but the forward-looking nature of markets means numbers remain more important than Fed talk, and the 50 basis points of cuts priced in towards the end of the year reflects cautious optimism about disinflation,” ING analysts said in a note.

Sterling slides ahead at BOE meeting

fell 0.1% to 1.2699, ahead of the Bank of England’s latest policy decision later in the session.

The central bank is widely expected to leave interest rates unchanged, even after data published earlier this week showed annual rates falling to 2.0%, in line with its medium-term target.

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This marked a sharp decline from the 41-year high of 11.1% reached in October 2022, but wage growth and underlying price pressures remain a concern 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 disciplined because their budget deficits exceed EU limits, with deadlines for deficit reduction to be set in November.

This comes after French President Emmanuel Macron called early elections following poor results for his party in the European Parliament elections, plunging the EU’s second-largest economy into political turmoil.

pared 0.7% to 0.8901 after cutting its key interest rate by 25 basis points, continuing the rate-cutting cycle following the March cut.

The decision was well balanced, given the recent rebound in economic growth and a break in the trend of gently declining inflation in Switzerland.

The yen remains weak

In Asia, trading traded 0.2% higher at 158.44 and trading at a one-month high, while the yen continued to show weakness after the Bank of Japan took a relatively dovish stance on its bond purchases.

traded 0.1% higher at 7.2604, with China’s yuan remaining under pressure on doubts over the strength of the country’s economic recovery.

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