Dollar falls on Federal Reserve's cautious inflation outlook while pound and Euro gain

Alys Key
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The pound hit $1.3146 (Source: Getty)

The dollar hit a 13-month low after the US Federal Reserve struck a cautious note yesterday, resulting in gains for the pound, Euro, and other major currencies.

The pound rose to $1.3146, its highest level since September, while the Euro reached its highest point for more than two years at $1.1777.

The Fed left rates unchanged, maintaining the benchmark interest rate at a target range of between one and 1.25 per cent.

The Fed also confirmed it would begin to wind down its economic stimulus programme by offloading some of its hoard of bonds "relatively soon", which was taken by many observers to mean September. It has previously said the move would happen "this year".

But the Fed also recognised that the outlook of inflation was weaker than it had previously indicated. The cautious note led many investors to believe a third hike in interest rates this year may be delayed again, or kept off the cards altogether.

Read more: Now oil prices are nearing $51 as US inventories drop

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