Pound weaker on mortgages, manufacturing news

The pound was weaker Tuesday on continuing speculation that the UK is close to recession as new data showed that manufacturing continues to contract there and that mortgage approvals fell again in the latest data.

The pound was also hurt by news that the government will suspend the stamp duty on UK homes costing less than £175,000, with the tax relief to begin Wednesday.

In morning trade in New York, the pound traded at 81.38p to the euro while it cost $1.7867 to buy a pound.

The US dollar saw gains Tuesday on significantly lower crude oil prices and on speculation that the US economy could do better than economies in Europe and Asia, with gains coming even though the Institute for Supply Management’s factory index dropped to 49.9 in August, and indication that manufacturing activity contracted during the month.

The dollar traded at $1.4540 at mid-morning in New York, while the euro and was worth ¥108.67.

The Australian dollar traded at 83.67 cents US after the Reserve Bank of Australia cut interest rates to 7 percent, from 7.25 percent, a move that was widely expected and on new figures showing home approvals there down 2.3 percent in July.

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