Euro Gains Against Dollar

FRANKFURT — The euro and the pound both edged higher against the U.S. dollar on Thursday ahead of interest rate decisions by the European Central Bank and the Bank of England.

The 15-nation euro bought $1.5830 in morning European trading, up from $1.5828 in New York late Wednesday. The pound edged up to $1.9769 from $1.9751.

The ECB is expected to leave its main interest rate unchanged at 4 percent and the Bank of England is expected to cut its rate by a quarter percentage point to 5 percent at their respective meetings.

James Hughes, an analyst with CMC Markets, said the Bank of England's expected rate cut has already been priced in by markets, as have predictions that the ECB will hold steady.

He said that markets will be studying remarks by ECB president Jean-Claude Trichet for "any clues as to just how long Trichet feels he can continue to leave rates unchanged in a struggling global economy."

Trichet's stance has contrasted with that of the U.S. Federal Reserve, which has cut rates repeatedly as it moves to stem a slowdown in the United States.

Worries about a possible U.S. recession have increased the likelihood that the Federal Reserve may cut interest rates even further as the ECB — which is focusing on fighting record levels of inflation — leaves the cost of borrowing unchanged.

Lower interest rates can weigh on a nation's currency as traders transfer funds to countries where they can earn higher returns.

The dollar declined Wednesday to 101.15 Japanese yen from 102.04 yen.