Pound weaker after PM rumors, rate decision

The pound was weaker Thursday on rumors that Prime Minister Gordon Brown was to resign in the wake of four resignations by members of Parliament over charges of inappropriate personal spending, speculation that was denied by a government spokesman.

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, while Halifax, part of Lloyds Banking Group (LSE: LLOY) reported that home values grew by 2.6 percent in May when they had been expected to 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.

ECB President Jean-Claude Trichet said that Eurozone interest rates are “appropriate” for the time being, and that he thinks the worst of the economic crisis has passed, but despite his comments, further cuts in Eurozone rates could still be in the cards.

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.

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