The dollar rose to near a three-week high against the yen on Thursday and fell near a two-week low against sterling, on news of the surprise decision from the Bank of England to keep interest rates unchanged. Stimulus expectations from the Bank of Japan helped return risk appetite to markets.

The Pound rose strongly following the BOE announcement that it was holding back from introducing more stimulus to the UK economy. It did signal that it would do so as early as next month if conditions warrant it.

Yen Down, Euro Up

The yen tanked across the board, sliding past 105 yen per dollar and 140 yen per pound, as the positive mood on global stock markets stretched into a sixth day and speculation that the Bank of Japan could take steps to fund government spending directly was hyped up by the media.

According to Tony Bedikian, managing director of global markets at Citizens Bank, “… the markets like to see global central bank friendliness, whether that be holding rates steady or pushing rates further downward. At the moment, albeit the Bank of England kept rates steady and that was a surprise, their next move is not expected to be a tightening; it’s expected to be an easing.”

The euro rose 0.3 percent against the dollar to $1.1122 and the New Zealand dollar fell by 0.8 percent after central bankers there said they would issue an economic update before next month’s policy meeting — an unusual step read by some as a sign the Reserve Bank was preparing to cut rates.