Euro, pound weaken on interest rate prospects

Story link: Euro, pound weaken on interest rate prospects

The euro and the pound both weakened in relation to most major currencies on Wednesday.

The shared currency declined on the possibility that, while the European Central Bank will hold interest rates steady tomorrow, the ECB’s president will say that rates will have to be cut soon in order to aid growth.

Meanwhile, the pound was hurt by new information that consumer confidence in the UK was down to its lowest level in three years in January, making it more likely that the Bank of England will also cut interest rates soon.

At nearly 1 p.m. in New York, the dollar traded at $1.4633 to the euro after brushing a two-week high versus the shared currency at $1.4591 to the euro, while at the same time the greenback traded at $1.9611 to the pound.

The yen was at ¥156.1174 to the euro and at ¥209.2199 to the pound while it traded at ¥13.912 to the South African Rand and at ¥83.868 to the New Zealand dollar as investors sold the yen to buy the higher-yielding currencies.

The Canadian dollar was stronger on new data showing that business and government spending went up in January and that the value of building permits issued in December grew by 0.4 percent against a prediction that they would remain at the same level as in November.

It took $1.0038 to buy a Canadian dollar in early afternoon trade in New York.