Pound weakens on service sector data

Pound weakens on service sector data

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The pound was weaker versus the US dollar for the week after new data showed that the UK service sector contracted at its fastest rate in 16 years in September and after house prices fell yet again there, making it likely that the Bank of England will cut UK interest rates when its Monetary Policy Committee meets on 9 October, possibly by as much as half a percentage point.

In late morning trade in New York, the pound traded at 77.77p to the euro while it took $1.7739 or ¥188.0741 to buy a pound.

The US dollar was higher versus the euro Friday as demand for the greenback grew.

The dollar traded at $1.3796 to the euro at around 11:30 a.m. in New York, while at the same time it took ¥106.02 to buy a dollar and ¥146.2652 to buy a euro.

The euro was hurt by comments from Jean-Claude Trichet, the president of the European Central Bank, that the bank considered cutting interest rates before deciding yesterday to hold the rate at 4.25 percent for the time being.

Meanwhile, sentiment has the Federal Reserve likely to cut US interest rates by from half a percentage point to three-quarters of a percentage point at its next meeting, scheduled for 29 October.