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Dollar firms; sterling steady ahead of BoE decision

Published 2024/06/20, 03:34
Updated 2024/06/20, 06:57
© Reuters. FILE PHOTO: Pound and U.S. dollar banknotes are seen in this illustration taken January 6, 2020. REUTERS/Dado Ruvic/Illustration/File Photo

By Rae Wee

SINGAPORE (Reuters) -The British pound held broadly steady on Thursday ahead of the Bank of England's (BoE) rate-setting meeting while the dollar firmed a touch, though moves were subdued as traders awaited fresh market catalysts.

Currencies were trading in tight ranges following a holiday in the United States and as investors looked not only to the BoE but also central bank decisions in Switzerland and Norway.

Sterling last bought $1.2718 after having eked out a slight gain in the previous session, while the euro was flat at $1.0743.

The dollar tacked on 0.04% against the yen at 158.14, as the Japanese currency remained not too far from an over one-month low of 158.255 per dollar hit last week.

Against a basket of currencies, the greenback ticked up 0.05% to 105.26, edging towards last week's one-month top of 105.80.

The BoE is widely expected to keep rates steady on Thursday, and the focus will be on any guidance on how soon an easing cycle could begin.

While data on Wednesday showed British inflation returned to its 2% target for the first time in nearly three years in May, details of the report pointed to persistent underlying price pressures - ruling out chances of an early rate cut.

"There's no doubt they keep rates on hold," said Tony Sycamore, a market analyst at IG. "The headline numbers for inflation were probably a welcome relief, but there were upside surprises in services components again.

"Potentially they could open the door at the next meeting, but it still seems like we're two meetings away from a potential rate cut there for me."

However, the Swiss National Bank (SNB) is expected to trim its key policy rate by 25 basis points for a second straight meeting on Thursday, with recent strength in the Swiss franc and benign domestic inflation adding to the case for looser monetary conditions.

The Swissie last stood at 0.8838 per dollar, hovering near a three-month high.

It similarly held near a four-month high of 0.94785 per euro hit in the previous session, as the common currency continues to be pressured by political turmoil in France and the wider bloc.

"The Swissie has performed quite well against the euro, and inflation has been declining in Switzerland, so again, the strength of the Swissie doesn't play well for this idea that you want to get inflation a little bit higher," said Rodrigo Catril, senior currency strategist at National Australia Bank.

© Reuters. FILE PHOTO: Pound and U.S. dollar banknotes are seen in this illustration taken January 6, 2020. REUTERS/Dado Ruvic/Illustration/File Photo

Elsewhere, the Aussie edged 0.03% higher to $0.66745, while the New Zealand dollar advanced 0.06% to $0.61345.

Data on Thursday showed New Zealand's economy grew faster than expected in the first quarter but remained soft. That did little to alter market views on the country's monetary policy outlook, with a Reuters poll last month expecting the rate-easing cycle to start by year-end.


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