Investing.com - The dollar was broadly lower against most of the other major currencies on Thursday after far weaker than expected data on U.S. first quarter growth, while the pound rose to almost five year highs following robust U.K. factory data.
The euro was trading at three-week highs against the dollar, with EUR/USD up 0.10% to 1.3880.
The dollar remained on the back foot after data on Wednesday showed that the U.S. economy expanded at an annual rate of just 0.1% in the first quarter, well below forecasts for an expansion of 1.2%.
Despite the sharp slowdown in growth the Federal Reserve said Wednesday it would reduce its bond purchases to $45 billion a month, in a widely expected decision. The Fed also said interest rates would remain on hold at record lows for a "considerable time" after the bond-buying program ends later this year.
The U.S. central bank acknowledged that first quarter growth was far weaker than expected, but added that growth had started to pick up in recent weeks.
Investors were beginning to turn their attention to the April nonfarm payrolls report due for release on Friday, which was expected to show that the recovery in the labor market was continuing.
Meanwhile, sterling rose to almost five-year highs, with GBP/USD advancing 0.22% to 1.6907.
The pound strengthened after data showed that manufacturing activity in the U.K. expanded at the fastest rate in five months in April, bolstering the outlook for the wider recovery.
A recent string of upbeat reports about the U.K. economy has raised expectations the Bank of England could raise borrowing costs ahead of other central banks.
USD/JPY was trading at 102.22, holding above Wednesday’s lows of 102.02, while USD/CHF slipped 0.17% to 0.8789.
The Australian and New Zealand dollars were steady, with AUD/USD at 0.9285 and NZD/USD edging up to 0.8624.
The commodity linked dollars shrugged off data on Thursday showing that China’s official manufacturing purchasing managers’ index ticked up to 50.4 last month from 50.3 in March, but exports orders declined sharply, adding to concerns over a slowdown the world’s second largest economy.
Elsewhere, USD/CAD edged up 0.11% to 1.0971.
The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, slumped to a three-week low of 79.52.