The British pound held broadly steady on Thursday as the market awaited the Bank of England’s (BoE) rate decision.
The dollar, meanwhile, faced mixed movements against major currencies as it awaited fresh market catalysts. The pound traded at $1.2719, having eked out a slight gain in the previous session. The euro rose 0.03% to $1.0747.
The dollar slipped 0.05% against the yen to 157.99, though the Japanese currency remained close to its one-month low of 158.255 per dollar hit last week. Against a basket of currencies, the greenback was little changed at 105.23, some distance from last week’s one-month top.
Picture: Sterling maintains its strength as seen on the VT Markets app.
Currencies traded in tight ranges following a U.S. holiday. Investors looked not only to the BoE but also to central bank decisions in Switzerland and Norway. The BoE is widely expected to keep rates steady on Thursday, focusing on guidance for when an easing cycle could begin.
British inflation data showed a return to the 2% target for the first time in nearly three years in May, but underlying price pressures remain. This suggests an early rate cut is unlikely.
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The Swiss National Bank (SNB) is expected to trim its key policy rate by 25 basis points for the second straight meeting.
Recent strength in the Swiss franc and low domestic inflation support this expectation. The Swissie traded at 0.8840 per dollar, near a three-month high, and held close to a four-month high of 0.94785 per euro, pressured by political turmoil in France and the wider eurozone.
Elsewhere, the Australian dollar edged 0.01% higher to $0.6673, while the New Zealand dollar steadied at $0.6131. Data showed New Zealand’s economy grew faster than expected in the first quarter but remained soft, leaving market views on the country’s rate outlook unchanged.
The pound’s stability suggests that the market has priced in a steady rate decision from the BoE. The focus will shift to any guidance on potential future rate cuts. The cautious forecast is for the pound to maintain its current range unless the BoE surprises with a more dovish stance.
The dollar’s slight decline against the yen indicates a wait-and-see approach by investors ahead of more substantial economic data.
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