The British pound was up 0.7%, to a two-week high of $ 1.3368, after the Bank of England raised its main interest rate to 0.25% from a record low of 0.1%.
The euro improved 0.35% to $ 1.13350, after the The ECB said it will cut bond purchases in March from its Pandemic Emergency Purchase Program (PEPP) of 1.85 trillion euros and will end the plan in March, as expected. However, it will increase the purchase of bonds in its Asset Purchase Program (PCA), which is longer but more rigid.
“The ECB surprised the market with the relatively contained size of the monthly purchases in the PCA going forward, although there are cautious elements in its statement regarding the reinvestments of the PEPP and the fact that it could resume,” said Jane Foley of Rabobank in London.
Foreign exchange markets increased their rate hike bets by the ECB after the bank’s statement and are now betting on a 15 basis point hike by December 2022, compared to 8 basis points earlier in the day.
On a busy day for central banks, the Swiss National Bank kept its ultra-low rates unchanged, while Norges Bank raised its benchmark rate a day after the Federal Reserve revealed its tightening plans.
The Swiss franc fell 0.15% against the euro, to 1.0454 units, not far from its peak since July 2015, while the Norwegian krone gained 0.4% against the dollar, at 8.94 units.
Against a basket of six prominent currencies, the dollar lost 0.4%, to a one-week low of 95.989 units, after hitting a three-week high the day before, when the Fed said it would end pandemic-era bond purchases in March and pave the way for three rate hikes expected in 2022.
Source From: Ambito
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