MW: Pound gets a boost from rate talk in BOE minutes; dollar off
By MarketWatch
PORT LOUIS, Mauritius (MarketWatch) - The pound gained against the euro and U.S. dollar Wednesday after minutes from the Bank of England's latest interest-rate meeting showed one member wanted to raise rates.
Also weighing on the U.S. dollar, which fell against the euro and yen, were expectations the Federal Reserve would keep its low-rate stance at the close of its rate meeting later Wednesday.
Higher interest rates generally support a currency because they make some assets denominated in the currency - say, government debt - more attractive.
The British pound (CUR_GBPUSD 1.4909, +0.0105, +0.7093%) bought $1.492, up 0.7% from $1.4822 in late North American trading Tuesday. Against the euro, it traded at 1.2143 euros, up 0.5%.
Andrew Sentance, an external member of the MPC, voted against his fellow committee members in favor of a quarter-point hike due to fears of rising inflation, according to the minutes of the June 10 meeting, released Wednesday. The other 7 members voted to keep rates on hold at 0.5%. See full story.
Sentance's decision to vote for a rate rise "might have caught off guard those expecting no relevant news from today's minutes," wrote Chiara Cora, an economist with UniCredit Research, in emailed comments.
The dollar index (DXY 86.00, -0.11, -0.12%) , which tracks the U.S. unit against six major counterparts, slipped to 85.974 from 86.079 in late North American trading Tuesday. The pound is one of the most heavily weighted in the index.
Also helping the pound, said analysts, was the U.K. government's Tuesday announcement of a budget that would slash spending and the fiscal deficit.
The euro (CUR_EURUSD 1.2277, +0.0015, +0.1223%) pared some gains from Asian trading, rising to $1.2279 from $1.2273.
Against the Japanese yen, the dollar (CUR_USDYEN) was at ¥90.35, down from ¥90.56 late Tuesday.
Meanwhile, China's yuan nudged higher against the U.S. dollar, though at a smaller pace than seen earlier in the week.
The dollar was quoted at 6.8055 yuan at midday, down 0.1% from its Tuesday close of 6.8136 yuan. China set the daily dollar parity rate, the mid-point of the band in which it allows its currency to trade, at 6.8102 yuan at the start of trade Wednesday, a fraction below Tuesday's close.
On Tuesday, the dollar recovered some gains against the euro, as U.S. stocks turned notably lower in afternoon trading. See Tuesday's Currencies report.
