Dollar is slightly higher while the pound is close to 14-month highs ,In advance of the BoE announcemen
The dollar index, which compares the value of the dollar to six important rivals, increased by 0.1% to 102.400.
BRITAIN - As investors processed a flurry of monetary policy choices made by central banks last week and anticipated a crucial decision by the Bank of England on Thursday, the dollar edged up on Monday.
Global efforts by central banks to reduce excessive inflation have dominated currency market movements, with the dollar index experiencing its worst weekly decline since January last week after the Federal Reserve decided not to raise interest rates.
The dollar index, which compares the value of the dollar to six other major currencies, increased 0.1% to 102.400. It was still quite close to the 102.00 one-month low it reached on Friday. Due to a holiday, U.S. markets are closed on Monday.
In a busy week for central banks, the Bank of Japan's decision to maintain its ultra-easy policies on Friday kept the yen brittle as the European Central Bank increased rates by 25 basis points on Thursday and left the door open to further increases.
The yen remained unchanged at 141.870, trading close to a seven-month low of 141.980 earlier on Monday. The euro fell by 0.2% to $1.09275, trading close to a one-month high.
This week's Federal Reserve chair Jerome Powell's scheduled speech before the US Congress will be eagerly watched by traders for any clues about the direction interest rates may take in the largest economy in the world.
The testimony was one of the key risk events for the dollar this week, according to currency experts at MUFG, but they expected similar messaging after the Fed decision last week.
The decision to postpone a raise this month did not indicate that the cycle of rate increases was ended, the analysts said. "The Fed was clear that they now felt they could slow the pace of hikes," they added.
According to the CME FedWatch tool, markets are pricing in a 72% chance that the Fed will raise interest rates by 25 basis points next month.
When the Bank of England meets on Thursday, investors anticipate a rate increase of at least 25 basis points as it confronts inflation that is already running at more than four times its objective.
On the anticipation that UK interest rates will rise faster than those of other major nations, the pound is trading at close to 14-month highs against the dollar. At $1.28175, the pound was largely unchanged.
Money markets predict that the BoE will choose to increase interest rates by 25 basis points with a 50% possibility.