Entering the European session, the US dollar has started to reduce gains and the pound has rebounded as the market prepares to await the outcome of the Bank of England (BOE) policy meeting at 7pm (Malaysian time).
At the time of writing, the dollar index that measures the strength of the greenback dollar is trading declining around 92.25.
However, the king of the currency remained traded higher, still supported by hawkish statements from Federal Reserve (Fed) Vice Chairman Richard Clarida who had hinted at policy tightening.
Clarida said the conditions for raising interest rates could be reached by the end of 2022, and is confident that the central bank will announce a reduction in its asset purchase program later this year.
The main focus of the market is now shifting to the outcome of the BOE policy meeting which is expected to continue to maintain current interest rates and bond purchases. Governor Andrew Bailey’s statement will be the focus to get a clearer indication of future policy -making.
At the beginning of the European session, the pound traded higher above 1.39000, with investors still taking cautious steps in placing positions on the currency's trading.
Market optimism over expectations of an interest rate hike by the Central Bank of New Zealand (RBNZ), continued to put kiwi dollar trading higher, albeit slightly disturbed by the strengthening US dollar.
The Aussie dollar also held on to gains following a decision by the Australian Central Bank (RBA) to maintain plans to reduce its bond purchases early next month.
