Euro, pound weaker on rate speculation

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The euro and the pound both weakened Wednesday on the likelihood that the European Central Bank and the Bank of England will cut interest rates again soon, with the euro finding its weakest level in more than four years against the yen, which gained on all major currencies during the day on a retreat from purchases of higher-yielding currencies.

The euro was worth ¥126.9839 and $1.2867 in late morning trade in New York, while the pound traded at 78.8p to the euro and was worth $1.6247 at the same time.

Comments from Bank of England governor Mervyn King in a speech at Leeds that the UK is likely in a recession and that house prices in the UK will probably continue to fall put the pound at a one-week low versus the euro.

The pound was also hurt by the release of the minutes of the most recent meeting of the Bank of England’s Monetary Policy Committee, which revealed that the vote to cut interest rates earlier this month was unanimous.

Argentina’s peso became one of several emerging markets currencies to decline in relation to the US dollar as the country looked like it could be headed toward its second default in a decade after the Argentine president floated a plan to seize ten private pension funds.

The Argentine peso traded at 3.2175 pesos to the dollar, while the Russian ruble fell to 26.928 rubles to the greenback, the Korean won was at 1,350.3 won to the US currency, the Brazilian real traded at R$2.1180 to the dollar and the Mexican peso traded at 13.605 pesos to the dollar.