Investing.com - The euro fell to more than three month lows against the stronger yen on Wednesday after the Bank of Japan signaled that additional easing is not on the cards anytime soon, while robust U.K. retail sales data and hawkish Bank of England minutes propelled sterling to 16-month highs against the single currency.
EUR/JPY touched lows of 138.23, the weakest since February 7 and was last down 0.37% to 138.33.
The yen strengthened broadly after the BoJ said its stimulus program has been working as intended, and refrained from implementing additional easing measures at the conclusion of its two-day policy meeting on Wednesday.
The central bank said the economy is showing signs of weathering the impact of a sales tax increase that came into effect on April 1 and pledged to continue to expand the monetary base at a pace of ¥60 trillion to ¥70 trillion per year.
Meanwhile, EUR/GBP fell 0.31% to 0.8103, the lowest level since January 2013 and was last down 0.28% to 0.8113.
The pound jumped after data showed that U.K. retail sales surged in April, while the minutes of the Bank of England’s May meeting indicated that policymakers are becoming more hawkish.
Retail sales jumped 1.3% in April, the Office of National Statistics said, more than double forecasts for a 0.5% increase, driven by higher food sales over the Easter holiday.
On a year-over-year basis, retail sales climbed 6.9% in April, ahead of expectations for a 5.2% gains after rising by 4.8% in March.
At the same time, the minutes of the BoE’s May meeting showed that the Monetary Policy Committee voted unanimously to leave interest rates on hold at record lows this month.
However, the minutes also noted that some members believe the decision on when to raise rates is "becoming more balanced," indicating that some policymakers are becoming more hawkish about the argument for hiking borrowing costs.
The euro remained under pressure amid heightened expectations for monetary easing by the European Central Bank at its upcoming June meeting and after data late last week showed that the euro zone economy grew more slowly than expected in the first three months of the year.
Elsewhere Wednesday, the dollar fell to fresh three-and-a-half month lows against the yen, with USD/JPY down 0.38% to 100.94.
The dollar remained softer ahead of the minutes from the Federal Reserve’s latest monetary policy meeting due out later Wednesday, as investor’s awaited insight on the central bank's view of the economy.
Recent U.S. economic reports indicating that the recovery remains uneven have weighed on U.S. Treasury yields, pressuring the dollar.
On Tuesday, New York Fed President William Dudley reiterated the central bank’s dovish stance, saying the pace of rate hikes was likely to be “slow”.
GBP/USD hit two-week highs of 1.6921 and was last trading at 1.6890, up 0.33% for the day.