The dollar index was 0.28% higher at 105.49 after a volatile 10 days that has seen mixed signals from the U.S. economy and European markets rocked by French political uncertainty

The dollar jumped on Thursday, while the Swiss franc declined and the pound slumped as a busy day of central bank meetings kept currency traders alert.

The dollar index was 0.28% higher at 105.49 after a volatile 10 days that has seen mixed signals from the U.S. economy and European markets rocked by French political uncertainty.

Helping the U.S. currency jump was a decline in the Swiss franc after the Swiss National Bank reduced interest rates to 1.25%, following on from a cut in March.

The dollar jumped 0.64% to 0.8901 francs as the Swiss currency dropped from nearly a three-month high in the wake of the rate reduction, which came with forecasts of a further drop in inflation to 1.1% in 2025.

Given the appreciation of the franc in the context of the French political turbulence, we had expected a dovish message, but not a reduction, according to Christian Schulz, deputy chief European economist at Citi.

This cut could be premature if French politics stabilises and weakens the franc, he added. The franc is seen as a safe haven and had risen over the last week.

Sterling slid on Thursday ahead of a BoE interest rate decision at 1100 GMT at which the central bank is expected to hold borrowing costs at a 16-year high of 5.25%.

The pound was 0.14% lower on Thursday at $1.2701, but up from a one-month low of $1.2658 on Friday.

The FX focus today switches to central bank meetings in Europe, stated Chris Turner, global head of markets at lender ING.

We think that the risks of a dovish BoE are underpriced, he said, using a term that typically means policymakers support interest rate cuts.

Elsewhere, the Norwegian crown advanced to a four-month high against the euro after the Norges Bank held rates at a 16-year high of 4.25%.

The euro dropped to its lowest since late January against the crown at 11.286, down nearly 0.6%.

Volatility in currency markets has picked up over the past 10 days as political uncertainty in Europe has combined with the long-standing guessing game about central bank rate cuts to cause investors new problems.

The euro was on the back foot again on Thursday, 0.24% lower at $1.0716 but still above the six-week low of $1.0667 touched on Friday.