Investing.com - The dollar hit eight month highs against the pound on Wednesday as dovish Bank of England minutes fuelled fears over more monetary easing, and pulled back from session lows against the yen.
During European late morning trade, the dollar hit its highest level since June against sterling, with GBP/USD dropping 0.76% to 1.5309.
The minutes of the BoE’s February meeting showed that policymakers were split six to three on whether to increase the bank's quantitative easing program to GBP400 billion from GBP375 billion, with BoE Governor Mervyn King voting in favor of an increase.
Separately, official data showed that the number of people claiming unemployment benefits in the U.K. fell by a seasonally adjusted 12,500 in January, compared to expectations for a decline of 5,000.
The U.K. unemployment ticked up to 7.8% from 7.7% in December. Analysts had expected the jobless rate to remain unchanged.
The dollar almost unchanged against the yen, with USD/JPY inching up 0.01% to 93.57.
Investors were awaiting an announcement on nominees to replace outgoing Bank of Japan Governor Masaaki Shirakawa, whose policies Prime Minister Shinzo Abe has criticized for not going far enough to combat deflation.
The yen showed little reaction earlier after official data showed that Japan’s trade deficit rose to a record JPY1.629 trillion in January.
However, the data showed that exports increased 6.4% year-on-year, the first increase in eight months.
The dollar was steady against the euro, with EUR/USD inching up 0.04% to 1.3393.
The single currency remained supported after data on Tuesday showed that the ZEW index of German economic sentiment hit a 34-month high in February.
The euro’s gains looked likely to remain capped ahead of the outcome of the upcoming general elections in Italy, amid wariness that a hung parliament could hamper efforts to implement further economic reforms.
Elsewhere, the greenback was lower against the Swiss franc, with USD/CHF slipping 0.16% to 0.9209.
The greenback was broadly higher against its Canadian, Australian and New Zealand counterparts, with USD/CAD rising 0.23% to 1.0137, AUD/USD down 0.30% to 1.0323 and NZD/USD tumbling 1.26% to 0.8362.
The New Zealand dollar fell sharply after Reserve Bank of New Zealand Governor Graeme Wheeler said the currency is overvalued and warned that the bank is ready to intervene.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, inched up 0.08% to 80.62.
The Federal Reserve was to release the minutes of its most recent policy meeting later in the trading day, while the U.S. was also to release official data on building permits, housing starts and producer price inflation.
