Yen falls on Fitch sovereign downgrade The Japanese yen fell against other major currencies after Fitch cut its credit rating on Japan to a negative outlook, clearing the way for further potential downgrades. The agency reduced Tokyo's sovereign credit rating from AA to A+, helping the dollar rise to Y79.83 on the news, a five-day high and a gain of 0.5 per cent on the day. The pound added 0.3 per cent to Y126.05 while the euro gained 0.2 per cent to Y101.93. The yen remained close to three-month highs against the dollar, however, with the greenback continuing to benefit from the escalating eurozone crisis. The Fitch announcement came ahead of a Bank of Japan meeting this week, with some speculation the central bank could extend its programme of monetary easing to weaken the yen. "If Fitch weaken the yen a bit, the Japanese will be happy," noted Kit Juckes, foreign currency strategist at Société Générale. The pound edged closer to a two-month low against the dollar, losing 0.4 per cent to hit $1.5763, as figures revealed a drop in UK inflation to 3 per cent in April year on year, down from 3.5 per cent the previous month and raising expectations of further quantitative easing by the Bank of England. Analysts said foreign currency markets would pay close attention to the minutes of the BoE's Monetary Policy Committee, due to be released on Wednesday, for any signs of direction on monetary easing. The pound rose against the euro after falling against the single currency in the previous four trading days. Sterling was 0.1 per cent higher against the euro at €1.2361, as the single currency came under pressure again. The euro fell against the dollar after rising to $1.2824 the previous day, its highest level in nearly a week. Currency traders said the rises had been largely technical, with recent data showing speculators had placed record short bets on the single currency. The euro was down 0.4 per cent against the dollar at $1.2767 by mid-morning trading in London.