Sterling weaker on BofE report

Story link: Sterling weaker on BofE report

Sterling weakened Wednesday after Bank of England Governor Mervyn King said that economic growth in the UK is expected to “slow sharply” next year, raising expectations that the Bank’s Monetary Policy Committee will cut interest rates at least once next year.

In issuing its quarterly report on inflation, the Bank said that cutting rates once should lower inflation to the to the Bank’s 2 percent target by 2009.

At just before 1:30 in New York, the pound was trading at 71.34p versus the euro, barely off a four-year low reached earlier in London trade, while it took $2.0561 or ¥229.5429 to buy a pound.

The yen was also weaker after worries about the subprime sector receded, making investors more willing to enter riskier investments.

Japan’s currency traded at ¥111.64 to the dollar while it stood at ¥163.7534 to the euro.

The US dollar was lower in relation to the euro, trading at $1.4668 to the euro, while just a bit earlier in the session the greenback was 1 percent lower against the South African rand when the rand traded at 6.6097 to the dollar.