Norway central bank Governor Oeystein Olsen is signaling a willingness to tolerate more weakness in the krone, among the worst-performing currencies of the past year, even if that causes inflation to accelerate.
The pound fell for the first time in five days against the dollar after U.K. inflation dropped to its lowest rate in 4 1/2 years in May, damping speculation the Bank of England will raise interest rates sooner than forecast.
The yield difference between U.K. two- and 30-year government bonds shrank to the least in five years as comments by the Bank of England’s David Miles fueled bets policy makers are moving closer to raising interest rates.
The foreign-exchange market is signaling more pain ahead for currencies that benefit from a sustained global recovery, five years after the onset of the worst financial crisis since the Great Depression.
The pound dropped for a second week against the dollar after Moody’s Investors Service cut the U.K.’s AAA credit rating and Bank of England Governor Mervyn King’s indicated he backed more economic stimulus.