Pound weaker on Mervyn King comments

Story link: Pound weaker on Mervyn King comments

The pound was weaker Wednesday on the Bank of England’s expectation, voiced by Bank governor Mervyn King, that the UK’s economy will not begin to expand again until sometime next year.

Additionally, the Bank expects that inflation will fall to as low as 0.4 percent this year.

In late morning trade in New York, the pound traded at 89.77p to the euro, while it took $1.5149 to buy a pound, taking back some of its earlier losses.

Some believe that losses for the pound could be limited by recent indications that the recession could be nearing an end.

Meanwhile, the US dollar strengthened as investors looked for safe places to put their cash after the Commerce Department reported that US retail sales fell 0.4 percent in April.

At shortly after 11 a.m. in New York the greenback traded at $1.36 to the euro while the Japanese yen traded at ¥130.6882 to the shared currency and at ¥96.095 to the US dollar.

The euro was weaker on comments from an official of the European Central Bank indicating that the bank will probably widen its program to purchase assets, spending more and buying other assets aside from covered bonds.

In addition, the European Union’s office of statistics said that Eurozone production was down 20.2 percent in March from the same month last year.

Mexico’s peso was hurt by the reported drop in US retail sales last month as investors reacted to the news by turning away from purchases of higher-yielding currencies.

The peso, which traded at 13.3275 pesos to the dollar in late morning trade in New York, has been on the decline since Standard & Poor’s cut Mexico’s credit rating from “stable” to “negative” on Monday.