Sterling, yen, Swiss franc all weaker

Story link: Sterling, yen, Swiss franc all weaker

Sterling weakened on Thursday after the Monetary Policy Committee of the Bank of England decided to leave interest rates at their current level of 5.25 percent. Some analysts believe interest rates have peaked, but other are not so sure and expect rates to rise again this year. Those who believe that rates have hit their ceiling point to an announcement by UK energy company Centrica that it will cut what it charges for electricity by 11 percent and will drop gas prices by 17 percent beginning in March. This, the analysts say, will help the UK interest rate to return to the Bank of England target of 2 percent.

In mid-afternoon trade in New York, sterling had dropped 0.2 percent in relation to the Japanese yen to �237.20, while it fell 0.6 percent to $1.9580 versus the US dollar and was down 0.7 percent against the euro, to �0.6655.

The euro was 0.1 percent lower versus the greenback, to $1.3035, but it had been lower against the dollar earlier, before the announcement that the European Central Bank had also voted to leave interest rates at 3.5 percent, as had been expected. Most analysts, however, expect that rates will climb again in March, especially after ECB president Jean-Claude Trichet said that the Bank needs to be �vigilant� in watching for inflation. Mr. Trichet often uses that word in comments in the month before the Bank hikes interest rates.

The yen was weaker after it seemed that earlier fears that the yen might be a major topic of discussion at this weekend�s G7 meeting in German were unfounded. Last week both the finance minister of Germany and the prime minister of Luxembourg had said recent weaknesses in the yen should be addressed at the meeting. The yen dropped 0.4 percent to �121.20 versus the US dollar, while it fell 0.6 percent to �157.90 in relation to the shared currency.

The Swiss franc was also weaker on the session, 0.4 percent lower against the US dollar, to SFr1.2460, and down 0.5 percent to Sfr1.6240 versus the euro.