The British pound jumped to $1.6991 from $1.6870 late Monday. The move higher came after data showed strong activity in the U.K. service sector, the latest in a series of solid economic reports. The Bank of England will issue a monetary-policy decision on Thursday.
The euro rose to $1.3935 from $1.3876 late Monday. The shared currency is nearing its 2014 high of $1.3967, according to Camilla Sutton, chief foreign-exchange strategist at Scotiabank. The euro is “almost taunting” the European Central Bank ahead of its Thursday meeting, she said. Inflation in the euro zone is well below the ECB’s medium-term target of just under 2% and ECB officials have discussed how a high level of the euro exchange rate will continue to weigh on inflation.
The U.S. trade deficit narrowed by 3.6% to a seasonally adjusted $40.4 billion in March from a revised $41.9 billion in February, according to Commerce Department data released Tuesday. Janet Yellen is scheduled to testify before the Joint Economic Committee in Congress on Wednesday.
The ICE dollar index , which pits the greenback against a basket of six rivals, fell to 79.102 from 79.505 late Monday. The Dollax Index , which measures the dollar’s strength against a broader range of currencies, declined to 72.42 from 72.81.The dollar fell to ¥101.60 from ¥102.13 late Monday.
The Australian dollar increased to 93.55 U.S. cents from 92.75 U.S. cents late Monday. Reserve Bank of Australia left interest rates on hold and made few changes to the monetary-policy statement.