Pound stronger after declines

The pound strengthened versus both the greenback and the euro Monday after early declines after the Confederation of British Industry predicted that the UK economy will contract by 1.7 percent next year on and a separate report from Right move (LSE: RMV) showed that asking prices for UK homes fell 7.1 percent in November.

In late morning trade in New York the pound was trading at 84.33p to the euro while it took $1.5052 to the US dollar.

Declines for the US dollar came on a forecast from the National Association for Business Economics that the US economy will contract by 0.2 percent next year and after a report from the New York Federal Reserve showing another contraction in manufacturing in the region, although a separate Fed report showed US industrial production overall up more than had been anticipated in October.

The dollar had weakened to $1.2693 to the euro by late morning trade in New York.

The Japanese yen strengthened on the theory that falling equities markets and the announcement that Japan’s economy has entered a recession will reduce risky carry trades financed by the yen.

At late morning trade in New York the yen was at ¥96.725 to the US dollar, although it had weakened to ¥122.773 to the euro.

The Australia and New Zealand dollars were hurt by news of Japan’s into recession by the assumption that investors will sell the two currencies, but both gained back some of their declines later on.

The Aussie was worth 65.21 cents US and ¥63.0792 at late morning in New York while at the same time the kiwi traded at 55.63 cents US and at ¥53.854.

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