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Dollar edges higher on rate hike talk; pound strengthens

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More talk that the Federal Reserve could raise US interest rates as soon as June helped push the dollar higher against the euro Thursday.

[NEW YORK] More talk that the Federal Reserve could raise US interest rates as soon as June helped push the dollar higher against the euro Thursday.

But after Wednesday's strong gain, the greenback only added about 0.1 per cent, rising to US$1.1203 per euro.

On Thursday, one of the most dovish members of the Federal Reserve's policy board, William Dudley, expressed confidence in the economy and reiterated that a rate increase will be on the table in the June 14-15 meeting.

"If one of the most dovish members of the central bank thinks that a rate hike is imminent, then perhaps investors really need to re-think and re-price their expectations for tightening this year," said Kathy Lien of BK Asset Management.

Meanwhile opinion poll gains for the "remain" faction of British voters ahead of the June 23 referendum on exiting the European Union further bolstered the pound, which rose to US$1.4609, the fourth straight gain.

In the most recent Financial Times poll, 47 per cent of voters said they are in favor of staying in the EU versus 41 per cent who want to quit.

Sterling also struck 76.49 pence against the euro at one point, its highest level since early February, with support also from better-than-expected British retail sales data, analysts said.

AFP