Sterling rises on hawkish BoE rate split
Sterling rose on Thursday after more policymakers than expected at the Bank of England voted to keep rates on hold, even as the British central bank cut rates by 25 basis points as was widely expected.
Four of the BoE’s nine policymakers - worried about high inflation - sought to keep borrowing costs on hold, suggesting the BoE's run of rate cuts might be nearing an end.
The decision "was a little bit more hawkish than the market expected," said Sarah Ying, head of FX strategy, FICC Strategy at CIBC Capital Markets in Toronto.
The British pound was last up 0.47% on the day at $1.342.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, was up 0.05% at 98.23. The euro fell 0.13% to $1.1644.
The euro was boosted earlier on Thursday, reaching a more than one-week high of $1.1698, as investors welcomed talks in search of a breakthrough to end the war in Ukraine.
Russian President Vladimir Putin and U.S. President Donald Trump will meet in the coming days, after Trump's envoy, Steve Witkoff, held talks with Putin.
The single currency is likely to continue to be supported against the U.S. dollar by a relatively more hawkish central bank.
Markets are pricing in a cumulative 14 basis point decline in ECB rates by the end of 2026, with hikes expected in late 2026 and 2027, compared to expectations of 128 basis points in Fed rate cuts in the same time frame.
Against the Swiss franc, the dollar strengthened 0.09% to 0.807, after President Karin Keller-Sutter returned from Washington empty-handed after a trip aimed at averting a 39% tariff on the country’s exports to the U.S.
In cryptocurrencies, bitcoin gained 1.37% to $116,701.
Source: Reuters
