Pound hurt by comments, jobless claims

The pound weakened versus the euro and the US dollar on comments from Bank of England governor Mervyn King, who said that the UK economy will likely continue to contract next year, opening the way for more interest rate cuts.

New data from the Office of National Statistics which showed jobless claims in the UK were up by 36,500 in October to 980,900 in October also hurt the UK currency.

The pound traded at 83.68p to the euro in midday trade in New York while it took $1.5003 to buy a pound, as the UK currency made back some of its earlier session losses.

Meanwhile, the Japanese yen gained on the euro and other currencies Wednesday on a mid-course change in US bailout plans, as announced by US Treasury Secretary Henry Paulson, in which the US government will emphasize buying stakes in banks rather than buying up bad assets, as originally proposed.

At nearly noon in New York the yen traded at ¥95.24 to the US dollar and at ¥119.5737 to the euro, while it also gained against the higher-yielding Brazilian real to ¥41.808 and versus the South African rand to ¥9.1649 on the expectation that investors will abandon carry trades.

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