By Ray Wee
SINGAPORE (Reuters) – The pound was broadly flat on Thursday ahead of the Bank of England's interest rate decision later in the day, while the dollar fell as new market catalysts awaited.
Currencies were trading in tight ranges after a holiday in the United States, with investors looking not only to the Bank of England but also to central bank decisions in Switzerland and Norway.
The pound sterling bought $1.2719 in the latest trading after achieving slight gains in the previous session, while the euro rose 0.03 percent to $1.0747.
The dollar fell 0.05% against the yen to 157.99 yen, although the Japanese currency remained not far from the lowest level in more than a month at 158.255 yen to the dollar, which it recorded last week.
Against a basket of currencies, there was little change in the US currency at 105.23, a long way from the highest level in one month that it recorded last week.
The Bank of England is widely expected to hold interest rates steady on Thursday, and the focus will be on any guidance on when 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 continued underlying price pressures – ruling out chances of an early interest rate cut.
“There is no doubt they are keeping interest rates on hold,” said Tony Sycamore, market analyst at IG. “The headline inflation numbers may have been a welcome relief, but there were upside surprises in the services components again.
“They will probably open the door at the next meeting, but it still looks like we are two meetings away from a potential rate cut to me.”
However, the Swiss National Bank (SNB) is expected to cut its key interest rate by 25 basis points for the second meeting in a row, with recent strength in the Swiss franc and benign domestic inflation adding to the case for accommodating monetary conditions.
The latter reached 0.8840 per dollar, hovering near a three-month high.
The Swiss franc similarly held near a four-month high of 0.94785 to the euro hit in the previous session, with the single currency still under pressure from political unrest in France and the broader bloc.
“The Swiss franc has done very well against the euro, and inflation has come down in Switzerland, so again, the strength of the Swiss franc does not fit well with the idea that you want to push inflation up a little bit,” Rodrigo Catril said. , chief currency strategist at National Australia Bank (OTC:).
Elsewhere, it rose 0.01% to US$0.6673, while the New Zealand dollar settled at US$0.6131.
New Zealand's economy grew faster than expected in the first quarter but remained weak, data showed on Thursday. This did little to change the market's views on the country's interest rate outlook.