Pound hurt by data, rate speculation

Pound hurt by data, rate speculation

Story link: Pound hurt by data, rate speculation

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The UK pound weakened Wednesday on new data showing that consumer confidence had declined and that the services sector continues to contract there.

According to financial information services group Markit and the Chartered Institute of Purchasing and Supply, the UK services index has dropped to 40.1, while the Nationwide Building Society reported that UK consumer confidence is at its lowest in four years.

Also hurting the pound was a statement from Willem H. Buiter, a former member of the Bank of England’s Monetary Policy Committee, that it is possible that UK interest rates could drop to zero next year.

The MPC is widely expected to cut UK rates to 2 percent when it meets Thursday.

At just before noon in New York, the pound traded at 85.7p to the euro while it took $1.4773 to buy a pound.

The Japanese yen, meanwhile, gained in relation to the euro and the pound while it remained about even versus the greenback as investors fled risky currency trades.

The yen traded at ¥118.0228 to the euro and at ¥137.7212 to the pound while it was at ¥93.225 to the US dollar near midday in New York.

Meanwhile, the US dollar gained on the euro, trading at $1.266 to the shared currency, on bets that the European Central Bank will cut interest rates in the Eurozone on Thursday.