NEW YORK: The dollar dipped on Thursday as investors evaluated the likelihood that the US Federal Reserve will be more aggressive in stamping out high inflation if it persists, while the pound weakened after the Bank of England made no changes to its monetary policy.
Fed policymakers have been offering differing viewpoints on how long inflation is likely to stay high and when it will be appropriate to tighten monetary policy, after the Fed last week surprised markets by forecasting two rate hikes in 2023.
The dollar has slipped since reaching two-month highs on Friday in the wake of the Fed meeting.
The dollar index was last down 0.06% against a basket of currencies at 91.733. It is holding below a two-month high of 92.408 reached on Friday.
Sterling slipped after the Bank of England said inflation would surpass 3% as Britain's locked-down economy reopens, but the climb further above its 2% target would only be "temporary" and most policymakers favoured keeping stimulus at full throttle.
The British pound was last down 0.35% at $1.3916.
The euro gained 0.13% on the day to $1.1942. German business morale rose by more than expected in June and hit its highest level since November 2018 on companies' surging optimism about the second half of the year in Europe's largest economy, a survey showed on Thursday.
The greenback gained to 111.11 Japanese yen overnight, the strongest since March 2020, before dropping back to 110.78.
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