The dollar dropped to its lowest in five years against the sterling Thursday, stung by yesterday’s dovish outlook on interest rates by the Federal Reserve.
The central bank tapered its asset purchase plan by another $10 billion dollars, as expected.
However, most Fed members do not think the benchmark interest rate should rise from near zero until into 2015, according to their latest projections.
Fed Chair Janet Yellen said at a post-decision press conference that it would be “considerable time” between when the bond taper ends and when rate hikes begin.
Meanwhile, this week’s minutes from the most recent Bank of England meeting suggest that U.K. policymakers are leaning toward hiking rates in the coming months.
The dollar dropped to $1.7050 versus the sterling, and is down more than 10 percent in the past year.
Early losses took the dollar to $1.3610 versus the euro. Two weeks ago the dollar hit a 4-month peak of $1.35 on European Central Bank stimulus.
There was once again little movement against the yen, with the dollar holding in a stubborn trading range near Y102.
In economic news from the U.S., manufacturing activity in the Philadelphia region has unexpectedly expanded at a faster rate in the month of June, according to a report released by the Federal Reserve Bank of Philadelphia on Thursday.
The index of activity in the sector reached its highest reading since last September.
The Labor Department released a report on Thursday showing that initial jobless claims pulled back roughly in line with estimates in the week ended June 14th.
The report said initial jobless claims dipped to 312,000, a decrease of 6,000 from the previous week’s revised level of 318,000.