Pound weaker on construction data

Story link: Pound weaker on construction data

The pound weakened Monday after the Chartered Institute of Purchasing and Supply said its construction purchasing manager’s index fell to 36.7 in July from 38.8 in June, its lowest since reporting began in 1997, representing a bigger contraction than expected in the construction sector that comprises 6 percent of the UK economy.

A report that the Royal Bank of Scotland (LSE: RBS; NYSE: RBS PRM) could report a loss later this week also contributed to the pound’s troubles.

The news reduced the likelihood that the Bank of England will raise UK interest rates when its Monetary Policy Committee meets later this week.

In late morning trade in New York the pound traded at 79.41 to the euro while it took $1.9658 to buy a pound.

The US dollar was also weaker in relation to the euro as equities markets declined on continuing worries about losses in credit markets, with the greenback trading at $1.5611 to the shared currency.

A new report from the US Commerce Department that showed consumer spending up 0.6 percent in June but that spending actually fell 0.2 percent when the figures were adjusted for inflation, hurt the US currency.

Meanwhile, the yen lost ground as investors regained their appetite for higher-yielding currencies.

The yen traded at ¥108.0350 to the US dollar while it fell to ¥168.6587 to the euro.

Both the Australia and New Zealand dollars benefited from the return to carry trades, with the Australian dollar seeing gains even though house prices there fell in the second quarter, the first decline in nearly three years.

The Australian dollar traded at 93.19 cents US and at ¥100.6778 in late morning trade in New York, while at the same time the New Zealand dollar was at 73.14 cents US and at ¥78.999.

The Canadian dollar weakened versus the US dollar on worries that commodities will not be able to cushion the economy there from US economic troubles as the loonie traded at C$1.0318 to the greenback.