Euro, pound lower against dollar

FRANKFURT — The euro and the pound drifted lower against the U.S. dollar on Thursday as markets anticipated more interest rate cuts from the Bank of England and European Central Bank.

In morning European trading, the 15-nation euro bought $1.2914, down from $1.2992 in New York late Wednesday. The British pound slipped to $1.5940 from $1.5960.

Analysts expected both central banks to follow in the footsteps of the U.S. Federal Reserve, which last month lowered its benchmark rate by a half percentage point to just 1 percent.

The ECB's benchmark rate currently stands at 3.75 percent and the Bank of England's at 4.5 percent.

As far as the ECB is concerned, "the market has been positioned for a cut of at least 50 basis points at today's meeting for quite some time," said UniCredit economist Aurelio Maccario.

The Bank of England could cut its rates from 4.5 percent to as low as 3.75 percent. Currency markets already have priced in a rate cut of some kind, said James Hughes of CMC Markets.

Lower interest rates can drive investors away from a currency as they seek higher returns elsewhere.

In other trading Thursday, the dollar dropped to 97.95 Japanese yen from 98.95 yen.

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