Pound stronger after interest rate cut

The pound strengthened Thursday on a decision by the Bank of England’s Monetary Policy Committee to cut UK interest rates to 1 percent.

The cut, which was widely expected, took the UK rate to a record low.

In late morning trade in New York, the pound traded at 87.55p to the euro while it took $1.4669 to buy a pound and the yen traded at ¥133.6438 to the UK currency.

Meanwhile, the euro weakened after the European Central Bank announced that it will hold interest rates at 2 percent for the time being, but the shared currency made back part of its declines as the New York session progressed.

ECB President Jean-Claude Trichet made comments that were taken by many to mean that the Bank would not follow the US Federal Reserve in cutting rates to near zero, but he conceded that the Eurozone rate could fall below the new level, raising speculation that the bank could cut rates in March.

The US dollar traded at $1.2844 to the euro at late morning in New York, while the yen weakened to ¥117.0113 to the shared currency, from ¥115.01 to the euro earlier in a general weakening of the Japanese currency that also took it to ¥91.105 to the US dollar.

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