Sterling stable awaiting BoE decision; dollar fluctuates against the yen

By RaeWee

SINGAPORE (Reuters) – The British pound was broadly stable on Thursday ahead of a Bank of England (BoE) interest rate decision later in the day, while the dollar trailed ahead of new market catalysts.

Currencies traded within tight ranges after a holiday in the United States and investors looked not only at the BoE, but also at the decisions of central banks in Switzerland and Norway.

Sterling last bought $1.2719 after making slight gains 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 remained close to 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 last month’s high.

The BoE is widely expected to hold rates steady on Thursday, and the focus will be on any clues as to how quickly an easing cycle could begin.

While data on Wednesday showed UK inflation returning to the 2% target in May for the first time in almost three years, details of the report pointed to continued underlying price pressures, ruling out the chance of an early rate cut.

“There’s no doubt they’re leaving rates unchanged,” said Tony Sycamore, a market analyst at IG. “The headline inflation numbers were probably a welcome relief, but there were further upside surprises in the services sector.

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

However, the Swiss National Bank (SNB) is expected to cut its key policy rate by 25 basis points for a second meeting in a row, with the Swiss franc’s recent strength and favorable domestic inflation strengthening the case for looser monetary conditions.

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

The Swiss franc similarly held near a four-month high of 0.94785 per euro in the previous session, with the common currency still under pressure from political turmoil in France and the broader bloc.

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

Elsewhere, the Aussie edged 0.01% higher to $0.6673, while the New Zealand dollar was steady at $0.6131.

Data on Thursday showed New Zealand’s economy grew faster than expected in the first quarter but remained weak. That did little to change the market view of the country’s interest rate prospects.

(Reporting by Rae Wee; Editing by Edwina Gibbs)

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