Analysis-Europe's currencies feel fresh pain as central bank support fades
By Naomi Rovnick and Dhara Ranasinghe
LONDON(Reuters) — There's no respite for struggling European currencies as a likely pause in central bank interest-rate rises and a weakening economic outlook puts the focus on prospective rate cuts ahead.
Sterling slid to a more than six-month low against the dollar on Thursday, even after the Bank of England held rates at a 15-year high and pledged to raise borrowing costs again if it cannot tame inflation.
The Swiss franc, one of this year's best performing major currencies versus the dollar, fell almost 1% at one point after Switzerland surprised markets by pausing its rate rise cycle.
Meanwhile, Thursday's quarter-point rate rise in Sweden failed to provide much respite for the battered Scandinavian currency, which is down over 6% against the greenback so far this year.
In short, the outlook for currencies in Europe is bearish, analysts and investors say, citing a strengthening dollar and stagnant economic growth in European nations as oil prices rise.
«We are turning to a bigger focus on growth than what central banks do,» said Kit Juckes, global head of currency strategy at Societe Generale (OTC:SCGLY).
SOUNDING HAWKISH
The BoE offered mixed messages by pledging to stay tough on inflation, still more than triple its 2% target, while noting that economic growth was slowing.
The European Central Bank last week lifted rates to a record 4% and upgraded its inflation forecast for 2024, but the euro fell and has lost almost 2% against the dollar this month.
SocGen's Juckes said the euro was «headed for a look at parity,» in a reference to the $1 marker.
The ECB, like the U.S. Federal Reserve, has pushed the idea of rates staying higher for longer. This backdrop should
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