Foreign exchange – Greenback declines, sterling recovers to commerce above $1.22

© Reuters.  Dollar retreats from multi-month highs; sterling recovers to trade above $ 1.22© Reuters. Dollar retreats from multi-month highs; sterling recovers to trade above $ 1.22 – The dollar was broadly lower on Thursday after hitting near nine-month highs in the previous session on the back of expectations for a U.S. rate hike, while sterling regained ground as expectations for a rate cut next week diminished.

The , which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.21% at 98.48, after hitting highs of 99.09 in the previous session, its highest level since February 1.

The index has rallied so far this month as hawkish remarks by Fed officials in recent weeks cemented expectations for a rate hike before the year’s end.

Expectations for higher interest rates typically boost the dollar by making the currency more attractive to yield-seeking investors.

The Fed’s next meeting is in November, but a rate hike ahead of the presidential election is seen as unlikely.

Investors are currently pricing a 68.4% chance of a rate hike at the Fed’s December meeting; according to federal funds futures tracked’s Fed Rate Monitor Tool.

Investors were turning their attention to data on U.S. third quarter growth due for release on Friday for further cues.

The pound recovered to trade above the $ 1.22 level, with up 0.39% to 1.2237.

Sterling fell on Tuesday to the lowest level since the flash-crash earlier this month, before rebounding after Bank of England Governor Mark Carney said since the June 23 Brexit vote.

The comments were seen as an indication that the BoE will leave rates unchanged at its meeting next week.

The euro retreated from Tuesday’s eight-month lows, with climbing 0.31% to 1.0923.

The dollar edged up against the yen, with at 104.34, holding below the six-month high of 104.86 set on Tuesday.

The Australian dollar pared back early gains made after data showing a stronger than expected rebound in underlying inflation in the third quarter curbed expectations for a near-term interest rate cut.

hit highs of 0.7709 and before pulling back to trade at 0.7666, still up 0.25% for the day.

Subdued inflation readings in the first and second quarters had prompted the Reserve Bank of Australia to cut interest rates in May and August, bringing rates to a record low 1.5%.

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