In early deals on Tuesday, the pound declined against its major counterparts as the U.K. stocks opened lower today, reducing demand for the currency.
U.K. stocks fell, with the FTSE 100 Index dropping from the highest level in almost five months, led by Barclays Plc as its Abu Dhabi investors sell 4.12 billion pounds ($6.8 billion) worth of the lender's shares.
Barclays, the U.K.'s third-largest bank, sank 13 percent. Xstrata Plc and Anglo American Plc fell more than 2 percent, pacing a retreat in base metals prices.
The FTSE 100 Index lost 53.96, or 1.2 percent, to 4,452.23 at 8:26 a.m. in London, erasing some of yesterday's 2 percent rally. The FTSE All-Share Index declined 1.1 percent.
U.K. stocks rallied yesterday after data showed Chinese manufacturing expanded for a third month, sending a gauge of mining shares to an eight-month high. The FTSE 100 has rebounded 27 percent from this year's low on March 3 amid growing optimism the worst of the recession may be over.
A report from the Bank of England said today that the number of loans approved for house purchases in the U.K. increased to 43,201 in April from 40,038 in March. The April level was higher than the previous six months average of 33,845 and 41,000 expected by economists.
In addition, the Bank of England upwardly revised UK's M4 money supply growth for April to 0.2% from 0.1% reported initially. In March, money supply had grown 0.3%. At the same time, the BoE left the annual growth unrevised at 17.4%.
The pound, which closed yesterday's trading at 1.6445 against the dollar slipped to 1.6338 during early deals on Tuesday. The next downside target level for the pound-dollar pair is seen at 1.625.
The U.S. currency came under heavy selling pressure yesterday as the troubled automaker General Motors Corp filed for bankruptcy as the Obama administration took the first steps to try to revive a failed icon of American industry by extending unprecedented federal funding and oversight.
The bankruptcy filing was the third-largest in U.S. history and the largest ever in U.S. manufacturing. The decision to push GM into a fast-track bankruptcy and provide $30 billion of additional taxpayer funds to restructure the automaker is a huge gamble for the Obama administration.
During early deals on Tuesday, the pound dropped against the Swiss franc. At present, the pound-franc pair is worth 1.7514, down from Monday's close of 1.76. If the U.K. currency slides further, it may likely target the 1.747 level.
The Swiss economy contracted the most since 1992 as sluggish global demand continued to hurt the country's exports. However, the pace of decline was less than expected.
Data released by the State Secretariat for Economic Affairs or SECO showed that gross domestic product or GDP fell 0.8% sequentially in the first quarter following a downwardly revised 0.6% contraction in the fourth quarter. That was the worst performance since the final quarter of 1992. Meanwhile, economists had forecast the economy to shrink 1.5%. GDP declined for the third straight quarter, while two consecutive quarters of negative GDP defines a recession.
On an annual basis, the real GDP dropped 2.4% in the first three months of 2009. Economists had forecast a 1.7% contraction after a 0.6% fall in the final quarter of 2008.
The Credit Suisse said the SVME purchasing managers' index for Switzerland rose to 39.8 in May from 34.7 in April, the strongest increase since September 2005. The PMI rose for the second straight month, breaking the 15-month downtrend that has been in place since December 2007. Meanwhile, economists had forecast a reading of 36.5. However, the index is still below the 50-mark that divides expansion from contraction.
Against the yen, the pound fell to 157.35 in early trading on Tuesday. This may be compared to yesterday's close of 158.76. On the downside, 155.8 is seen as the next likely target for the pound-yen pair.
Japanese Finance and Economy Minister Kaoru Yosano said today that the country's economy may have hit bottom during the January-March period, underscoring his cautious optimism about the economic outlook. Yosano's remarks came after the government released data Monday showing that supply outstripped demand by 8.5%, or about Y45 trillion in annualized terms, during the January-March quarter
The monetary base in Japan was up 7.9 percent on year in May, the Bank of Japan said today, coming in at 94.91 trillion yen. That was roughly in line with analyst expectations that had called for an 8.0 percent increase after the 8.2 percent annual gain in April.
In early trading on Tuesday, the pound edged down to 0.8650 against the euro. The near term support level for the pound is seen at 0.877. At yesterday's close, the euro-pound pair was worth 0.8615.
The French statistical office INSEE announced today that industrial producer prices for the domestic market declined 6.4% year-over-year in April, compared with a 5.5% fall in the previous month. The April producer prices came in line with economists' expectations.
Month-on-month, producer prices decreased 0.9% in April, after falling 0.3% in March, revised from 0.4% fall reported initially. Economists were looking for a decline of 0.2%.
Meanwhile, the Eurostat said that Euro zone's jobless rate stood at 9.2% in April, up from 8.9% in the previous month. Economists were looking for a rate of 9.1%. This was the highest rate since September 1999. A year ago, the jobless rate was 7.3%. The number of unemployed persons increased by 396,000 to 14.58 million in April from 14.18 million in March.
Investors now focus on the North American session, in which the U.S. pending home sales report for April is due at 10:00 am ET.
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June 12, 2026 17:14 ET Major central bank action was the focus this week in economic news. The European Central Bank became the first major central bank to move in response to the rising inflationary pressures in the backdrop of the conflict in the Middle East. In North America, the U.S. inflation and trade data as well as Canada’s central bank decision gained attention. The Chinese trade data was the main news in Asia.