Investing.com – The U.S. traded at a five-week low in early European trade on closing interest rates on Wednesday, while strong UK inflation data surprisingly lifted the pound.

The dollar continued to slide in today’s trade, hours before the US Federal Reserve’s decision, and the dollar index hit 102.695 points, down 0.20% against a basket of foreign currencies.

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dollar and federal

A rebound in risk sentiment weighed on the safe-haven dollar as the week progressed, but losses were pared early Wednesday as attention focused on the outcome of the Federal Reserve’s two-day policy-making meeting later in the session.

{{ecl-168||Also, the US Federal Reserve} is now widely expected to raise interest rates by 25 basis points, and a minority expect the Fed to keep interest rates unchanged.

A month ago, the market was pricing in a reasonable chance of a 50 basis point hike, but the sudden financial instability has put more focus on raising interest rates to combat complicated monetary policy decisions.

The central bank meeting ends with a statement at 14:00 ET (18:00 GMT), followed by the president’s press conference half an hour later.

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Dollar and other currencies

Elsewhere, it rose 0.5% to 1.2270, after UK inflation picked up again in February, {{ecl-170 || The Bank of England} } will continue to raise interest rates despite current financial instability.

It rose 1.1% on the month, topping expectations for a 0.6% rise and returning to 10.4% from 10.1% that analysts had expected to fall below 10% for the first time since August.

Also, the Bank of England is due to announce its latest policy decisions on Thursday, and these figures can only raise the risk of another hike in interest rates, which would be the 11th in a row.

It rose to 1.0772, just below the five-week high seen overnight.

European Central Bank President Joachim Nagel told the Financial Times earlier Wednesday that he raised interest rates by 50 basis points last week and would need more increases to combat that.

“Our fight against inflation still has a long way to go,” Nagel told the newspaper, adding that he certainly feels “price pressures are strong and widespread across the economy.”

Also, Tadawul was up 0.4% at 0.6694, benefiting from stronger risk sentiment, up 0.1% at 132.57, while also up 0.1% at 6.8911.

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