British pound sinks to 6-month low vs. the dollar

British pound drops to 6-month low vs. the dollar; dollar steady against other currencies

Associated Press

NEW YORK (AP) -- The British pound reached a six-month low against the U.S. dollar Wednesday after the Bank of England said it wouldn't fight rising prices anytime soon.

The pound dropped to $1.5537 in late trading, versus $1.5652 late Tuesday.

Earlier Wednesday, it reached as low as $1.5522, according to data provider FactSet.

The Bank of England said inflation in the U.K. may reach 3 percent by this summer, above its 2 percent target. Bank of England Governor Mervyn King said inflation could be high for another two years, but that the bank would tolerate rising prices to support growth and employment. That implies the Bank of England has no plans to hike its interest rates to fight inflation. Higher interest rates tend to slow economic growth.

In other currency trading, the dollar inched lower against the Japanese yen, trading at 93.48 yen down from 93.52 yen late Tuesday. It also slipped against the Canadian dollar, sinking to CA$1.0019 versus CA$1.0030 late Tuesday

Against other major currencies, the dollar held tight. It was little changed compared with the Swiss franc, trading at 0.9173 of a Swiss franc versus 0.9176 franc late Tuesday.

And the euro was little changed versus the dollar, trading at $1.34477, up from $1.3444 late Tuesday.

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