Sterling stronger versus USD

Sterling gained on the US dollar on Monday as speculation increased that the Federal Reserve will cut US interest rates again before the end of the year while the Bank of England is widely expected to keep rates on hold at least for the time being.

In afternoon trade in New York a pound was worth $2.0688, while it took €1.3923 to buy a pound.

Meanwhile, the yen remained close to a two-year high versus the US dollar as more writedowns are expected due to defaults on subprime mortgages.

At just before 2 p.m. in New York the yen was trading at ¥108.1750 to the dollar after being as strong as ¥107.55 last Friday, its best rate versus the dollar since mid-2005, while the yen traded at ¥160.7317 to the euro, at ¥223.7924 to the pound and at ¥94.8153 to the Australian dollar.

The recent declines in the US dollar have made it more common for the greenback to be used to finance carry trades in place of the yen or the Swiss franc, traditionally the most common currencies used to fund the risky trades.

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