SINGAPORE, June 20 (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.
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.
(Reporting by Rae Wee; Editing by Edwina Gibbs and Shri
Navaratnam)
