Dollar falls to its lowest level in two months and pound rises

The dollar fell to a two-month low on Tuesday after Federal Reserve officials signaled the tightening cycle was coming to an end, while sterling rose to a 15-month high after more-than-expected wage growth in Britain.

Several Federal Reserve officials said on Monday that the bank would likely need to raise interest rates again to curb inflation, but added that the monetary tightening cycle was coming to an end.

The comments sent the dollar down to a two-month low against a basket of currencies at 101.67 as traders lowered their expectations about the size of the additional interest rate hike needed.

Expectations of US interest rate movements have become a major driver of the dollar since the central bank began its monetary tightening cycle last year.

Markets are now focused on US consumer price data due on Wednesday, which will show the level of progress the US central bank has made in its fight against hyperinflation.

Sterling rose to its highest level in 15 months at $1.2913 after wage growth in Britain hit a new record, increasing pressure on the Bank of England to take further monetary policy tightening measures to control inflation.

The yen was among the biggest gainers, as it rose about 0.6 percent, to come down from the level of 141 yen per dollar for the first time in about a month. In his most recent transactions, he reached 140.455 yen to the dollar.

The euro rose 0.1 percent to $1.1012, while the Australian dollar settled at $0.6680 and the New Zealand dollar fell 0.2 percent to $0.6198.

The Chinese yuan in foreign transactions rose to 7.2055 against the dollar in the latest transactions, after sentiment was boosted by the extension of the Chinese central bank’s support for the faltering real estate sector.