GDP decline hurts pound

The pound fell to a record low in relation to the Japanese yen as the yen traded at ¥118.85 to the UK currency Friday as the UK Office for National Statistics issued data showing that the gross domestic product was down by 1.5 percent in the fourth quarter of 2008, more of a decline than had been expected and the biggest quarter drop for the UK’s GDP since 1980.

The decline, coming after an 0.6 percent drop by the GDP in the third quarter, meant that the UK economy has now met the traditional definition of a recession by declining in two quarters in a row.

Contractions in both industry and the services sector contributed to the fourth-quarter decline.

At just before 11 a.m. in New York, the pound had taken back some of its declines against the yen as the yen traded at ¥122.044 to the pound, while at the same time the yen traded at ¥114.4787 to the euro and at ¥89.385 to the US dollar.

The euro, meanwhile, was hurt by a report that both the manufacturing and services sectors in the Eurozone contracted in January for the eighth month in a row.

The pound traded at 93.8p to the euro while it took $1.2807 to buy a euro and $1.3654 to buy a pound.

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