Sterling declines as Bank of England holds interest rates steady

Story link: Sterling declines as Bank of England holds interest rates steady

The US dollar strengthened on Thursday, with one analyst attributing the gains to recent good responses to weaknesses in equities markets. The greenback added 0.6 percent to SFr1.2235 versus the Swiss franc, while it added 0.3 percent against both the euro and the yen, standing at $1.3465 in relation to the euro and at ¥121.40 versus the yen at midday in New York.

Sterling, on the other hand declined after the Bank of England’s Monetary Policy Committee chose to hold interest rates at 5.5 percent for another month. Analysts expect that there will be another rate increase in the UK, but probably not until August. The UK currency dropped 0.3 percent to £0.6793 in relation to the euro and also fell 0.3 percent to ¥240.30 versus the yen, while it was 0.5 percent lower against the greenback to $1.9815.

In a surprise move, the Reserve Bank of New Zealand raised interest rates there by 25 basis points to 8 percent. This sent the New Zealand dollar 0.7 percent higher versus the US dollar to a 22-year high of $0.7555. The kiwi added 0.9 percent to ¥91.63 against the Japanese currency.

The Australian dollar was also stronger on the session after new data indicated that the unemployment rate in Australia was at a 33-year low in May, leading to speculation that interest rates there could go higher as well. The Australian dollar added 0.5 percent to $0.8444 versus the greenback, a 17-year high. In addition, the Aussie was 0.6 percent higher against the yen to ¥102.46, a 15-year peak.