The dollar index .DXY , which tracks the greenback against six major currencies, drew strength from the gains against sterling and was up 0.22 percent at 95.773.
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Sterling sank towards $1.30 on Friday, its weakest in three weeks, after stronger-than-expected jobs numbers in the United States strengthened speculation US interest rates would rise this year.
The Bank’s governor, Mark Carney, said that a majority of the nine-member Monetary Policy Committee (MPC) backed another cut if subsequent data showed the economy was deteriorating.
On Wall Street, a sharp rise in oil prices boosted energy shares, helping the S&P 500 index to post a modest gain of 0.3 percent.
According to a Reuters poll of economists, nonfarm payrolls likely increased by 180,000 jobs in July after surging 287,000 the prior month.
The British pound traded at $1.3325, keeping some distance from its three-decade low of $1.2798 hit nearly a month ago, although currency markets may be somewhat ambivalent over how to react to the BoE decision – buy sterling if the BoE cuts, sell if it doesn’t, or vice versa?
An overnight rally in crude oil prices also sharpened investors’ risk appetite, but caution before the July U.S. non-farm payrolls report later on Friday kept gains in check.
And th positive sentiment flowed through to Asia, where Hong Kong closed up 1.4 percent, while Sydney added 0.4 percent and Seoul gained 0.9 percent, Wellington put on 0.1 percent and Taipei 0.8 percent.
As well as cutting rates to a record-low 0.25 percent from 0.5 percent, the BoE launched two new schemes, one to buy 10 billion pounds of high-grade corporate bonds and another – potentially worth up to 100 billion pounds – to ensure banks keep lending even after the rate cut.
Yields on euro zone bonds such as German bunds also tumbled on Thursday as bond prices rose after the BoE news. “I expect a figure above 200,000”. The euro was steady at $1.1132 after losing 0.7 percent on Thursday. Benchmark 10-year US yields US10YT=RR fell to their lowest in three days, at 1.484 percent.
Gold XAU= was also flat at $1,360.30 an ounce ahead of the payrolls report, heading for a 0.7 percent gain for the week.
Oil prices rose for a second straight day and USA crude advanced firmly above the $40 a barrel mark on short-covering and after a modest stockpile drop at the delivery hub for US crude futures. It’s on track for a 0.4 percent gain for the week. It is still well above the 3-1/2-month lows hit earlier this week, as traders covered short positions.
Sterling fell by 1.3 per cent to just under €1.18 and by 1.5 per cent or 2 cents to $1.31.
Global benchmark Brent crude futures slipped 0.5 per cent to $44.07, heading for a weekly rise of 3.8 per cent.
The futures market is pricing in a 50-50 chance of another cut by year-end.
The Australian dollar hovered near a 3-week high of $0.7641, awaiting the Reserve Bank of Australia’s monetary policy statement due later in the day.
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“My feeling is the actions taken by the BoE will be viewed as considered, proactive and stabilising, which may stoke some confidence”, said Tobias Davis, head of corporate treasury sales at Western Union in London.
