The dollar fell to a 26-year low against the British pound Monday ahead of an expected rate hike by the Bank of England later this week.
The pound rose to $2.0173 — its highest level versus the dollar since June 1981 — in New York trading before retreating to $2.0165. The dollar also dropped to within a cent of its all-time low versus the euro, as rising global interest rates made the currency less attractive to investors.
The 13-nation euro rose to $1.3637, just shy of its April 27 all-time high of $1.3682, before dipping back to $1.3623.
The Bank of England and European Central Bank meet separately Thursday to discuss interest rates. The BOE is expected to raise its key rate a quarter-point from 5.5 percent, while the ECB is expected tighten monetary policy later this year.
The U.S. Federal Reserve, meanwhile, has left its key rate unchanged at 5.25 percent for the past year.
Higher interest rates, a weapon against inflation, can bolster a currency by giving better returns on fixed-income investments.
The dollar has been especially weak for so many months, it’s difficult to put a finger on a single catalyst for Monday’s losses, said David Solin, a partner at Foreign Exchange Analytics in Essex, Conn.
Source: MSNBC.
