Dollar Drops After U.K. Rate Cut

The dollar fell across the board Thursday as the Bank of England cut its key interest rate to a record low - but by less than had been expected by some.

Meanwhile, U.S. retailers rang in with glum sales figures for December and the Labor Department said Americans seeking public jobless aid jumped unexpectedly by more than 100,000 people.

The 16-nation euro rose to $1.3725 in late afternoon trading in New York from $1.3614 late Wednesday, while the British pound climbed to $1.5228 from $1.5132.

The Bank of England cut its rate by half a percentage point to 1.5%, the lowest level in the bank's 315-year history. The British economy has been battered by a housing crisis and a string of failed retailers.

There is now increasing pressure on the European Central Bank to cut its rate from the current 2.5% when it meets on Jan. 15. Most of the other major world economies, including the U.S. and Japan, have already ratcheted rates down to near zero, and analysts expect Britain will continue to chop at rates in an effort to propel economic activity.

Lower rates can help jump-start an economy, but weigh on a currency as investors seek higher returns elsewhere.

The dollar also fell to 91.40 Japanese yen from 92.65 late Wednesday, and dropped to 1.0930 Swiss francs from 1.1026.

U.S. news didn't help the buck - retailers' same-store sales, or sales at stores open at least one year, a key metric, mostly sank in December. Even Wal-Mart Stores Inc., which had benefited in 2008 from consumers' trading down, reported that its sales rose by 1.2% last month, less than had been expected. Wal-Mart also cut its profit outlook for the fourth quarter.