Investing.com – The dollar rose against the pound on Wednesday, after the Bank of England cut forecasts for growth and inflation, while the greenback eased off seven-year highs against the yen on dampened expectations for a general election in Japan in December.
USD/JPY pulled back from Tuesday’s seven-year highs of 116.10, and was last down 0.51% to 115.19.
The yen found support after a Japanese government spokesman said Wednesday it is up to the prime minister to decide when to call elections.
The yen weakened on Tuesday amid speculation that Prime Minister Shinzo Abe could call a snap election in December. Speculation that the prime minister could postpone a proposed sales tax increase, scheduled for October 2015 also weighed.
A win for Abe would indicate continued support for his for his economic and fiscal policies, which call for a weaker yen.
GBP/USD slid 0.36% to trade at 1.5859 after the BoE said inflation is likely remain below its 2% target in the near term and fall below 1% at some point during the next six months. The bank now expects inflation to take three years to return to its 2% target.
The bank said the outlook for inflation had weakened due to steep declines in commodity prices and the sluggish outlook for global growth.
The annual rate of U.K. inflation fell to a five-year low of 1.2% in September.
The bank also said it continued to expect economic growth of 3.5% this year but pared its forecast for growth in 2015 to 2.9% from 3.1% in August.
Earlier Wednesday, the Office for National Statistics reported that the number of people claiming unemployment benefits fell by 20,400 in October, below expectations for a decline of 24,900.
The U.K. unemployment rate was unchanged at 6.0% in the three months to September, compared to forecast for a downtick to 5.9%.
Meanwhile, EUR/USD held steady at 1.2478, not far from last Friday’s 26-month lows of 1.2356.
In a report, Eurostat said industrial production in the euro zone increased by 0.6% in September, below forecasts for a gain of 1.0%. Industrial production in August fell by 1.4%.
Year-on-year, industrial production inched up 0.6% in September from a year earlier, compared to expectations for a 0.2% decline and after dropping at a rate of 0.5% in the preceding month.
Elsewhere, the dollar was flat against the Swiss franc, USD/CHF at 0.9638.
The Australian, New Zealand and Canadian dollars were broadly higher, with AUD/USD rising 0.39% to 0.8720 and NZD/USD climbing 0.83% to 0.7872, while USD/CAD fell 0.18% to 1.1315.
The US dollar index, which tracks the performance of the greenback against a basket of six major currencies, was steady at 87.59, close to Friday’s four-and-a-half year peaks of 88.31.