Pound in decline on data, loss rumors for RBS

The pound weakened Monday on a contraction in UK the construction sector, which makes up 6 percent of the economy there, and on a report that the Royal Bank of Scotland (LSE: RBS; NYSE: RBS PRM) might soon report a loss, reducing the chances that UK interest rates could go up later this week

At late morning 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 and on a new report showing that when adjusted for inflation, consumer spending in the US dropped 0.2 percent in June sending the greenback to trade at $1.5611 versus the shared currency.

The yen lost ground, meanwhile, as investors bought more higher-yielding currencies, with then yen trading at ¥108.0350 to the US dollar while it fell to ¥168.6587 to the euro.

Both the Australia and New Zealand dollars were helped by the return to carry trades.

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, with the Aussie seeing gains even though house prices there fell in the second quarter for their first decline in nearly three years.

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

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