Pound weakens on interest rate possibilities

Story link: Pound weakens on interest rate possibilities

The pound weakened versus the US dollar on Wednesday on the continuing possibility that the Bank of England will cut interest rates again soon in order to protect the UK economy from slowing.

These concerns were amplified by the release of the minutes of the last meeting of the Bank’s Monetary Policy Committee, which showed that all members of the Committee voted in favor of a rate cut, the first unanimous vote since shortly after September 11, 2001.

Further, the minutes showed that the Committee considered an even bigger rate cut than they ultimately voted for at their most recent meeting.

In early afternoon trade in New York it took $1.9959 to buy a pound, the first time the UK currency has been worth less than $2 in three months.

At the same time, the pound traded at €1.4359 against the euro while it took ¥226.2453 to buy a pound.

The yen strengthened in relation to the euro, but lost gains versus the dollar after the results of an auction of discounted loans by the Federal Reserve were announced.

Just before 1 p.m. in New York, the yen traded at ¥162.7663 to the euro and at ¥113.3550 to the US dollar.

The euro lost ground to the dollar after comments from the president of the European Central Bank that inflation will not allow any interest rate cuts in the Eurozone next year and after business confidence in Germany was reported at its lowest level in nearly two years.

In afternoon trade in New York, it took $1.4359 to buy a euro.

The Swedish krona lost value against major currencies after the central bank there held interest rates at 4 percent.