The Swiss franc weakened against other major currencies in the European session on Thursday, after the Swiss National Bank lowered its key policy rate by 25 basis points for the second consecutive meeting, citing easing underlying inflationary pressures.

The SNB policy board, headed by Thomas Jordan, decided to cut the policy rate to 1.25 percent from 1.50 percent. The new rate will take effect on June 21.

The SNB had unexpectedly reduced its rate by a quarter point at the March meeting and became the first major central bank to ease the policy in the current cycle.

Banks' sight deposits held at the central bank will be remunerated at the SNB policy rate up to a certain threshold, and at 0.75 percent above this threshold, the bank said today.

In the European trading now, the Swiss franc fell to two-day lows of 0.9554 against the euro and 177.78 against the yen, from early highs of 0.9482 and 179.07, respectively. If the Swiss franc extends its downtrend, it is likely to find support around 0.97 against the euro and 173.00 against the yen.

Against the pound, the franc slid to a 3-day low of 1.1320 from an early two-day high of 1.1221. The GBP/CHF pair may test support near the 1.15 region. The Bank of England left its key interest rate unchanged at 5.25 percent, as expected, on Thursday.

The franc dropped to a three-day low of 0.8911 against the U.S. dollar, from an early high of 0.8831. On the downside, 0.90 is seen as the next support level for the CHF/JPY pair.

Looking ahead, Canada new housing price index for May, U.S. building permits for May, housing starts for May, weekly jobless claims, U.S. Philadelphia Fed manufacturing index for June and U.S. EIA crude oil data are slated for release in the New York session.

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