Pound weakens on Mervyn King remarks

Story link: Pound weakens on Mervyn King remarks

The pound lost ground to the US dollar, the yen and the euro on Wednesday, although in afternoon trade in New York it got back a bit of its losses to the Japanese currency.

Losses for the pound came after Bank of England governor Mervyn King said that the Bank could start buying corporate bonds and commercial paper in an effort to shore up businesses soon after it meets on 5 February, when it is expected to cut UK interest rates to 1 percent.

The rate speculation came after the minutes of the Bank’s January meeting were released, showing that the vote to cut rates to 1.5 percent at that meeting was 8 to 1 in favor of the half a percentage point cut, with the ninth vote asking for a full percentage point cut.

In mid-afternoon trade in New York the pound traded at 93.7p to the euro while it took $1.3738 or ¥121.7269 to buy a pound.

The yen backed off its earlier gains versus the greenback and the shared currency, trading at ¥88.605 to the dollar and at ¥114.0641 to the euro.

Meanwhile, the Swiss franc weakened versus the euro to SFr1.4929 to the shared currency after a Swiss National Bank official said the Bank is prepared to intervene to stop the franc from strengthening too much.