The currency maintained its recent advances

The dollar clung to recent gains against other major currencies on Thursday. Federal Reserve policymakers reaffirmed the central bank’s willingness to use aggressive interest rate hikes to combat the strongest inflation in decades.

Meanwhile, the Bank of England was generally expected to raise interest rates to their highest level since 1995, with sterling nudging higher ahead of the rate decision at 1100 GMT.

Fed officials continued to argue that interest rates in the United States were nearing their high.

Overnight, San Francisco Fed President Mary Daly and Minneapolis Fed President Neel Kashkari expressed their desire to bring high inflation under control.

The dollar was recently up by 0.2 per cent versus the yen, trading at 134.15 yen and somewhat weaker against the euro.

The dollar index, which compares the greenback to six other currencies, was at 106.34, easily above a one-month low reached earlier this week. It is up roughly 0.4 per cent this week, reversing the previous two weeks’ pattern.

Even though the dollar index reached its highest level in two decades in July, 70% of those polled said the dollar had yet to peak in this cycle.

Money markets anticipate a 50 basis point increase at the Fed’s September meeting, with a roughly 44 per cent likelihood of another huge 75 basis point increase. The Fed raised interest rates by 75 basis points at its June and July meetings.

The British pound gained 0.2 per cent to $1.2172. The Bank of England was expected to raise interest rates by 50 basis points to 1.75 per cent, the highest level since late 2008. Since its independence in 1997, the Bank of England has never hiked the Bank Rate by a half point.

The Australian dollar was trading at $0.6968, up 0.2 per cent from the previous day’s rise of over 0.5 per cent. It attempted to reclaim the symbolic $0.70 level earlier in the week.