Euro unchanged, pound higher against U.S. dollar

The euro was unchanged against the U.S. dollar on Wednesday before the Federal Reserve's verdict on interest rates, while the pound extended gains prompted by strong British inflation data.

The 13-nation euro bought US$1.3307 in morning European trading, unchanged from its level in New York late Tuesday. The pound rose to US$1.9627 from US$1.9609.

The dollar rose to 117.66 Japanese yen from 117.25 yen.

The Fed was widely expected to leave rates unchanged out of concern that signs of sluggishness in the U.S. economy have not sufficiently dampened inflation pressures, but markets were looking for signals on its future course.

Interest rate cuts typically are used to fend off economic slowdown by making it cheaper to borrow money for purchases. The Fed has left rates alone in recent months after a string of increases, while rates in Europe have risen.

Higher interest rates, used to combat inflation, can help bolster a currency by making certain types of investments more attractive, reports AP.

On Tuesday, the pound gained strongly after the British government said consumer prices rose 2.8 percent in the year ending in February keeping up pressure for rate increases.