The pound dropped against the yen, the dollar and the euro as services in the U.K. shrank at the fastest rate in at least 12 years and consumer sentiment fell. The euro slid against the dollar as economists forecast the European Central Bank will cut its main refinancing rate by a half-percentage point tomorrow.
The yen rose 0.5 percent to 117.89 versus the euro at 2:38 p.m. in New York, from 118.44 yesterday. Japan’s currency traded at 93.02 per dollar, compared with 93.18. It touched 92.54, the strongest level since Oct. 28. The euro lost 0.3 percent to $1.2673 from $1.2714.
Canada’s dollar dropped as much as 1.6 percent, the most in almost two weeks, as Prime Minister Stephen Harper threatened to suspend Parliament to stave off defeat at the hands of a united opposition. The loonie depreciated to C$1.2571 per U.S. dollar from C$1.2463 yesterday.
Sterling fell as much as 1.7 percent to $1.4666, the lowest level since Nov. 17, and dropped 0.9 percent to 85.99 pence per euro on evidence of a weakened British economy.
The yen appreciated 0.9 percent to 74.04 against the Canadian dollar and 1.3 percent to 137.21 versus the pound on speculation investors will unwind carry trades, in which they get funds in a country with low borrowing costs and invest where returns are higher. The Bank of Japan’s target lending rate of 0.3 percent compares with 2.25 percent in Canada.
Japan’s currency has gained 20 percent versus the dollar, 38 percent versus the euro and 51 percent against the Canadian dollar this year, hurting Japanese exporters. A drop in the greenback by 1 yen reduces the annual operating profit of Canon Inc., the world’s biggest camera maker, by 2.6 billion yen ($28 million), the Tokyo-based company said in October.