Pound hurt by PM resignation rumors

Pound hurt by PM resignation rumors

Story link: Pound hurt by PM resignation rumors

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The pound weakened Thursday on rumors that Prime Minister Gordon Brown was to resign, speculation that was denied by a government spokesman.

Rumors of the resignation were prompted by the recent resignations of four members of Parliament over questions about personal spending, and came on the same day as local elections in the UK.

Meanwhile, the Bank of England held interest rates steady at 0.5 percent and said it would not purchase any more gilts than those already announced.

Additionally Halifax, a division of Lloyds Banking Group (LSE: LLOY) said that home values in the UK were up by 2.6 percent in May, against an expected decline.

In late morning trade in New York the pound traded at 87.49p to the euro while it had recovered some of its declines against the US dollar as the greenback traded at $1.6236 to the pound.

The European Central Bank also held interest rates steady during the day, at a record-low 1 percent.

The decision was accompanied by comments from ECB President Jean-Claude Trichet that Eurozone interest rates are “appropriate� for the time being, and that he thinks the worst of the economic crisis has passed.

Despite Mr. Trichet’s comments, however, further cuts in Eurozone rates in the future were not said to be out of the question.

It took $1.4205 to buy a euro while the Japanese yen traded at ¥136.8466 to the euro and at ¥96.34 to the US dollar.