By William L. Watts, MarketWatch
LONDON (MarketWatch) -- The Bank of England made no changes to its monetary-policy stance Thursday, boosting the British pound.
Sterling pushed to a high just below $1.66 versus the dollar, up from around $1.6515 just ahead of the decision, and remains higher at $1.6553.
The euro erased an early gain scored in choppy trade against the pound to trade at 87.77 pence, a loss of 0.3% on the day.
The central bank made no change to the deposit rate it offers on reserves that banks park at the BOE. Traders had increasingly bet, however, that the Bank of England could move to lower the rate in an effort to move the reserves into the broader economy. Read about the BOE decision.
Bank watchers had expressed doubts for a variety of reasons.
For one, sterling money-market rates have fallen back to levels not seen since the start of 2008, said Jane Foley, research director at Forex.com.
"The fall in money-market rates suggests that the financial sector is healing, making it less likely that the bank will take action on this front," she said.
Foley warned that the market's overall reluctance to buy risky assets Thursday, meanwhile, could limit further upside for the pound against the dollar. The dollar has tended to trade in an inverse relationship to investors' risk appetite.
As expected, the bank's rate-setting Monetary Policy Committee also voted to leave its key lending rate unchanged at 0.5% and announced no change in its 175 billion pound ($290 billion) quantitative-easing program. Minutes of the meeting will be released on Sept. 23.
Meanwhile, the U.S. currency was largely flat against major rivals as equity markets turned in a mixed performance.
The dollar index (DXY 77.04, -0.05, -0.07%) , a measure of the greenback against a trade-weighted basket of currencies, stood at 77.133, up slightly from 77.116 on Wednesday. The index had on Wednesday fallen to its lowest level since September 2008 at 76.803.
The euro traded at $1.4535, little changed from $1.4539.
The dollar changed hands at 92.12 Japanese yen, little changed from 92.18 yen Wednesday afternoon.
Also Thursday, the Bank of Canada is expected to announce its latest interest-rate level and outlook on the economy. The currency changed hands at C$1.0867 versus the U.S. unit, up from C$1.0817.
