Pound weakens on news, data

Pound weakens on news, data

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The pound reached an all-time low versus the yen and also weakened in relation to the US dollar and the euro Tuesday on the news that Prime Minister Gordon Brown has proposed to pump another £50 billion in to the UK banking system, including a boost in the government’s share of Royal Bank of Scotland (LSE: RBS; NYSE: RBS PRM).

In late morning trade in New York the yen was at ¥125.5193 to the pound after going as low as ¥125.25 earlier, while at the same time the pound traded at 92.79p to the euro and it took $1.3941 to the US dollar.

Also playing into the decline of the pound was new data from the Office of National Statistics showing that consumer prices were up by 3.1 percent in December, from a gain of 4.1 percent in prices in November, with December’s decline in inflation the biggest one-month drop since 1997.

Contributing to falling inflation were declines in oil prices, price cuts by retailers in an attempt to get consumers to buy and a 2.5 percent cut in the value-added tax.

Meanwhile, the yen was also stronger in relation to the US dollar and the euro, with the yen trading at ¥90.035 to the greenback and at ¥116.4748 to the euro.