Pound weakens on manufacturing data

The pound weakened versus the euro Tuesday on the news that UK manufacturing output was down by 0.4 percent in August compared to July and after UK banks met with the government to discuss emergency funding for the banks, which could amount to up to £45 billion.

At early afternoon in New York, the pound traded at 77.75p to the euro while it took $1.3608 to buy a pound.

Meanwhile, the yen weakened in relation to the euro and the US dollar on the likelihood that there will be more demand for carry trades after the US Federal Reserve said it will buy commercial paper from US banks and businesses after investor interest dried up amid the current chaos in the financial sector.

There was no word about how much commercial paper the Fed will buy or when it will begin the purchases, but the program is scheduled to last until 30 April 2009 unless extended.

In early afternoon trade in New York, the yen traded at ¥138.8543 to the euro while it was at ¥102.0350 to the US dollar, at ¥178.5049 to the pound, at ¥65.43 to the New Zealand dollar and at ¥72.9448 to the Australian dollar.

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