Reuters: Hon Kong On Thursday, many U.S. Federal Reserve officials fought back against rumours they might limit the rate of interest rate increases, which helped the dollar hold onto recent gains. In contrast, the pound was unchanged ahead of a Bank of England policy announcement.
The BOE is expected to raise interest rates by 50 basis points (bps) to 1.75 percent, the highest level since late 2008; however, sterling barely moved in Asian trading prior to the announcement, which is scheduled for 1100 GMT, and is currently trading at $1.2148.
Since being granted independence in 1997, the BoE has never increased the bank rate by a half point.
The dollar index, which compares the greenback to six other currencies, remained steady at 106.37 after making little gains overnight. It is up roughly 0.5 percent this week, reversing the previous two weeks’ pattern.
“The dollar fell last week following the (policy-setting) Federal Open Market Committee meeting because the market wanted to assume that the Fed was swinging dovishly due to slowing growth,” said Sim Moh Siong, currency strategist at Bank of Singapore.
“There are a lot more FOMC speakers this week fighting back against this assumption, all singing the same tune: ‘we are not done, and you should expect additional rate rises,'” he added.
