Sterling Soars to Three-Month High Against Dollar
Posted on: Saturday, 3 September 2005, 15:00 CDT
THE pound soared to a three-month high against the dollar yesterday as investors fretted about the impact of Hurricane Katrina on the US economy.
The unemployment rate in America dipped to a four-year low of 4.9- per cent in August as companies added 169,000 jobs, but the statistics were compiled before Katrina slammed in to the Gulf coast, devastating New Orleans and several other communities.
President George W Bush has been confronted by new economic challenges from the hurricane, which has catapulted already lofty petrol and other energy prices even higher.
Many Wall Street economists believe Katrina's fallout will slow overall economic growth in the months ahead as higher energy prices crimp consumers' and businesses' appetite to spend. Some believe growth in the final quarter of this year could come in at a weak 2- per cent.
Sterling hit its highest level since mid-May at dollars-1.8429 before US jobs numbers were released.
It later eased to dollars-1.8411.
The dollar tumbled this week after weak manufacturing figures fanned concerns that US interest rates would not rise much further.
Sterling was also lifted by news on Thursday that Britain's manufacturing sector expanded in August after four months of contraction.
Meanwhile, oil prices fell as Europe prepared to tap up to two million barrels a day of fuel from emergency reserves to help ease a petrol crisis threatening the United States.
Petrol tanks have run down in the world's biggest consumer market after Hurricane Katrina tore at the heart of the US energy sector in the Gulf of Mexico on Monday and shut in nearly two million barrels per day of refining capacity.
As the crisis deepened, the International Energy Agency said it was considering releasing petrol reserves to help the US and Bush urged Americans to conserve fuel.
US crude was off 97 cents at dollars-68.50 in afternoon dealing on the New York Mercantile Exchange, after dropping more than dollars-2 a barrel to dollars-67.30.
London-traded North Sea Brent was down 67 cents to dollars- 67.05.
Source: Herald, The; Glasgow (UK)
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