The British pound maintained its steady stance on Thursday as traders braced for the upcoming monetary policy decision by the Bank of England (BoE), while the US dollar showed marginal gains in a relatively subdued trading environment awaiting fresh market catalysts.
Sterling was trading around $1.2718, holding onto slight gains seen in the previous session, while the euro remained flat at $1.0743.
Against the Japanese yen, the dollar inched up by 0.04% to 108.14 yen, hovering near a recent low of 108.255 yen per dollar recorded last week. The US dollar index, which gauges its strength against a basket of major currencies, nudged up 0.05% to 105.26, approaching the one-month high of 105.80 set last week.
Investor focus extended beyond the BoE’s meeting, with attention also directed at other central bank decisions scheduled for the day, including the Swiss National Bank (SNB). Analysts anticipated the SNB to lower its key policy rate by 25 basis points for the second consecutive meeting, citing the Swiss franc’s recent strength and subdued domestic inflation as reasons for further monetary easing.
The Swiss franc was trading near a three-month high against the dollar at 0.8838 and maintained its strength against the euro, hovering close to a four-month peak of 0.94785. Rodrigo Catril, senior currency strategist at National Australia Bank, emphasized that Switzerland’s struggle with declining inflation posed challenges for efforts to bolster price levels, influencing the SNB’s policy direction.
In the broader market context, the Australian dollar edged up marginally to $0.66745, while the New Zealand dollar also saw a modest increase to $0.61345. Market sentiment for the New Zealand dollar was influenced by data revealing better-than-expected economic growth in the country’s first quarter, although overall growth levels remained subdued. Analysts, however, maintained expectations of potential rate cuts by the end of the year, as indicated by a Reuters poll.
Overall, currency markets remained cautious ahead of central bank decisions, with the BoE anticipated to maintain its current interest rates amid stable inflation indicators. The global economic landscape, combined with domestic factors and geopolitical uncertainties, continued to shape currency movements, keeping traders on alert for potential shifts in market sentiment.