The euro rose 0.14% to $1.1677, its highest level since July 28

The euro hit a fresh 1-1/2-week high against a weakening dollar on Thursday as investors monitored Ukraine peace talks and shifted their focus to the Bank of England’s policy meeting later in the session.

The U.S. dollar remained under pressure amid growing concerns over partisanship creeping into key U.S. institutions.

The euro rose 0.14% to $1.1677, its highest level since July 28, with a possible peace deal in Ukraine seen as a positive driver for the single currency.

Ukrainian President Volodymyr Zelenskiy said he planned contacts with Germany, France and Italy on Thursday to discuss progress toward peace.

Sectors to benefit should be European consumers, growth-sensitive and construction-related sectors, said Mohit Kumar, economist at Jefferies.

It should also be positive for Eastern Europe as most of the reconstruction efforts would likely flow through Eastern European economies, he said.

Sterling was steady ahead of a policy announcement, with markets widely expecting another rate cut.

We suspect conviction levels are low in the supposed consensus view that rates can only go down and pressure affected currencies, said Geoff Yu, strategist at BNY, after warning that markets may be too complacent about stagflation risks.

The Bank of England will kick off what we expect to be a new run of cuts through August and September in Europe, but over-committing to easing risks policy error and prolonging stagflation, he added.

The Swiss franc rose 0.20% to 0.8047 versus the dollar , even as Swiss President Karin Keller-Sutter returned from Washington empty-handed after a trip aimed at averting a crippling 39% tariff on the country’s exports to the U.S.

While we still believe that a deal will ultimately be reached, it is likely to be far more expensive than Switzerland had hoped, said Michael Pfister, strategist at Commerzbank.

The dollar index, which measures the greenback against a basket of major peers, dropped to a fresh 1-1/2-week low at 98.00, down 0.20% on the day.