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Forex - Pound pushes higher before BoE, yen at 3-week lows

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Investing.com - The pound pushed higher on Thursday as investors waited to see whether the Bank of England would cut interest rates to fresh record lows after Brexit, while the yen slumped to fresh three-week lows against the dollar.

GBP/USD hit highs of 1.3276 and was last at 1.3213, up 0.52% for the day.

The BoE was to announce its latest monetary policy decision and publish the minutes of its meeting later Thursday.

The BoE could cut rates to a record low of 0.25% from 0.5%, where they have been pegged for seven years and it could also launch a new quantitative easing program to cushion the U.K. economy from the fallout from Brexit.

BoE Governor Mark Carney has indicated that monetary easing will be required in the aftermath of the vote to leave the European Union.

Sterling also found support after new British Prime Minister Theresa May appointed Philip Hammond as the new Chancellor of the Exchequer, replacing George Osborne.

Speaking Thursday, Chancellor Hammond said the U.K. economy has "taken a shock", as businesses and consumers were unprepared for the Brexit vote, but added that he would do whatever is necessary to steady the economy and restore confidence.

He also confirmed that he won't deliver an emergency budget in the next few weeks after the idea was floated by his predecessor.

The yen fell to fresh three-week lows against the dollar on Thursday amid expectations for more easing by Japan.

USD/JPY was up 1.1% at 105.65, the highest level since June 24, bringing the week's gains so far to 4.8%.

The yen has fallen after Japanese Prime Minister Shinzo Abe's ruling coalition increased its majority in parliamentary elections on Sunday, feeding hopes for a fresh package of stimulus measures to spur economic growth.

The Japanese currency was also hit by a report from Bloomberg that former U.S. Federal Reserve Chairman Ben Bernanke had floated the idea of "helicopter money" with one of Prime Minister Shinzo Abe's key advisers in April.

"Helicopter money" is a term to describe how a central bank could finance government budgets directly as a way to combat deflation.

The euro edged higher against the dollar, with EUR/USD up 0.13% at 1.1105.

The U.S. dollar index, which measures the greenback's strength against a trade-weighted basket of six major currencies, was steady at 96.31.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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