The Bank of England voted to hold interest rates unchanged at the June 20 policy meeting for the seventh meeting in a row at 5.25%, the highest since March 2008, matching analysts’ expectations. 

Sterling fell in European trade on Tuesday against a basket of major rivals, moving in a negative zone for the first time in four days on risk aversion ahead of the Bank of England’s policy meeting.

The BOE is widely expected to maintain interest rates unchanged for the seventh meeting in a row, but will likely provide clues on the future of rate cuts this year.

The Price 

The GBP/USD fell 0.15% today to $1.2703, with a session-high at $1.2724. 

The pound closed up 0.1% on Wednesday, the third profit in a row after hot UK services prices data. 

UK Inflation

Earlier data showed UK inflation is back to 2% for the first time in three years in May, however services prices remained stubbornly high. 

Most economists now expect mainline UK inflation to rise once more in upcoming months, which would dissuade the BOE from a rate cut today. 

BOE

The Bank of England is widely expected to maintain interest rates unchanged at 5.25%, the highest since 2008.

UK Rates

According to market bets, there’s a 36% chance the BOE will cut interest rates in August, down from 55% before. 

Traders now expect 39 basis points of total rate cuts by the BOE this year. 

The BOE has proven recently his reluctance to raise interest rates when it comes to facing inflationary pressures, and it remains on the ready to cut rates at the first possible change.

Such a chance could come in August following a spate of bearish remarks by several BOE officials. 

Yen declined in Asian trade on Thursday against a basket of major rivals, extending losses for the sixth straight session and almost touching six-week lows as US treasury yields rebounded. 

The recent Bank of Japan’s policy meeting’s minutes showed the BOJ discussed the impact of yen’s weakness on prices, with governor Kazuo Ueda opening the door for a rate hike next month. 

The Price

The USD/JPY pair rose 0.1% today to 158.12 yen per dollar, with a session-low at 157.80.

The yen lost 0.15% on Wednesday against the dollar, the fifth loss in a row, after marking a six-week trough last week at 158.26. 

The losses are mainly due to the huge difference in interest rates between the US and Japan.

US Yields 

US 10-year treasury yields rose 0.9% on Thursday, on track for the first profit in three days, in turn boosting the dollar against main rivals. 

The developments came ahead of important US labor data, in addition to remarks by several Fed officials. 

Bank of Japan

The Bank of Japan’s latest meeting minutes showed that policymakers discussed the impact of a weak yen on prices.

Now investors await the upcoming meeting in July, which could result in the second Japanese interest rate cut this year. 

Ueda

BOJ Governor Kazuo Ueda directly said on Tuesday that the BOJ could indeed raise interest rates once more next month according to data. 

Gold prices dipped on Wednesday after weak US retail sales data bolstered the odds of a Federal Reserve interest rate cut this year. 

Recent data showed US retail sales barely rose in May, indicating weak economic growth in the second quarter. 

Otherwise, the dollar index stabilized at 105.2 as of 19:18 GMT, with a session-high at 105.3, and a low at 105.1.

Markets are in a lull due to an official US holiday to celebrate the day it got rid of slavery, with operations resuming tomorrow.

On trading, gold spot prices fell 0.2%, or $3.70 as of 19:19 GMT to $2343 an ounce.