The U.S. dollar is steadily strengthening against major world currencies in trading on Thursday, the pound is getting cheaper after the publication of the results of the Bank of England meeting.
The ICE-calculated index that shows the trend of the U.S. dollar against six currencies (euro, Swiss franc, yen, Canadian dollar, pound sterling and the Swedish krona) rose 0.5% in trading, while the broader WSJ Dollar Index gained 0.7%.
The pound-dollar exchange rate was down to $1.2317 by 2:35 p.m., compared with $1.2425 at the close of the previous session.
The Bank of England raised its benchmark interest rate by 50 basis points (bps) to 3.5% at the end of Thursday’s meeting, as most analysts had expected. The rate was increased at the end of the ninth consecutive meeting and reached its highest value in 14 years.
The British Central Bank slowed the pace of rate hikes, with its leaders divided on the steps needed. Seven of the nine members of the Monetary Policy Committee (MPC) voted to raise the rate, with six, including Bank of England governor Andrew Bailey, in favor of a 50bp increase, while one vote was cast for a 75bp increase. Two MPC members voted to keep the rate at 3% per annum.
The European Central Bank (ECB) will announce the results of Thursday’s meeting at 16:15 Moscow time, and at 16:45 Moscow time it will hold a press conference with President Christine Lagarde.
The ECB may also slow the pace of key rate hikes to 50bp after their increase by 75bp in October and September, experts expect. In addition, the European regulator on Thursday is to present a plan to reduce the amount of assets on its balance sheet, which reached 5 trillion euros after years of bond purchases by the Central Bank.
The euro/dollar pair is trading at $1.0619 on Thursday compared to $1.0682 at the close of the previous session.
The dollar rose to 136.56 yen, compared to 135.47 yen in previous trading.
The day before the Federal Reserve System (FRS) raised its key interest rate by 50 basis points and made it clear that it is going to continue its rise. The rate was raised to 4.25-4.5% per annum – the maximum since 2007.
The head of the Federal Reserve Jerome Powell said during a news conference after the meeting that the U.S. Central Bank will stick to the course of tightening monetary policy until it returns inflation to the target level of 2%.
The Fed leaders’ median forecast is that the rate will reach 5.1% by the end of 2023 and fall to 4.1% by the end of 2024 and then to 3.1% by the end of 2025.
The dollar/yuan exchange rate rose to 6.9678 yuan on Thursday versus 6.9506 yuan the day before.
