Politics weigh on the pound

The pound weakened during the day Monday on new calls for UK Prime Minister Gordon Brown to resign after his ruling Labour Party sustained a defeat in last week’s European Union elections.

Comments from a former official of the Bank of England in a television interview that the Bank could print more money in order to buy more assets also hurt the UK currency, which still managed to regain some ground against the dollar and the yen in New York trade.

At nearly 11:30 a.m. in New York, the pound was stronger versus the shared currency as it traded at 86.87p to the euro while it took $1.5974 or ¥157.3163 to buy a pound.

The US dollar was stronger versus the euro on the possibility that the Federal Reserve will hike interest rates by the end of the year while the yen saw gains on new data showing fewer corporate bankruptcies and after sentiment among merchants improved.

In late morning trade in New York, the dollar traded at $1.2877 to the euro while the yen traded at ¥136.39 to the euro and at ¥98.48 to the US dollar.

The euro was hurt by a downgrade of the Republic of Ireland’s long-term credit rating from AA+ to AA by Standard and Poor’s.

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