2009.11.2004:22:00UTC+00Pound Slumps Against Majors

In early deals on Friday, the pound weakened against its major counterparts despite a rally in U.K. stocks.

The pound tumbled to a new multi-week low against the yen, 4-day low against the franc and an 8-day low against the dollar and the euro.

European shares rebounded today from the previous session's sharp falls and snapped a three-day losing run, aided by gains in commodity stocks on firmer raw material prices.

At 3:59 am ET, the U.K.'s FTSE100 index was up 31.54 points or 0.6% at 5,299.24.

The pound that closed yesterday's trading at 1.6668 against the dollar fell to an 8-day low of 1.6572 in early deals on Friday. The next downside target level for the pound-dollar pair is seen at 1.652.

During early deals on Friday, the pound declined to a 4-day low of 1.6837 against the Swiss franc and an 8-day low of 0.8991 against the euro. If the U.K. currency weakens further, it may target 1.682 against the franc and 0.906 against the euro. The euro-pound and the pound-franc pairs were worth 0.8956 and 1.6892, respectively at yesterday's close.

Germany's Federal Statistical Office announced that the producer price index or PPI dropped 7.6% year-on-year in October, same as in the previous month. Economists expected a decrease of 7.5%. A year ago, the PPI had grown 7.3%.

On a monthly basis, the PPI remained unchanged in October, after falling 0.5% in September. Economists were looking for an increase of 0.1%.

The pound slipped to a new multi-week low of 147.31 against the yen in early deals on Friday. On the downside, 146.4 is seen as the next target level for the U.K. currency. At yesterday's close, the pound-yen pair was quoted at 148.40.

Japan's Cabinet Office declared that the economy is in deflation, the first official announcement of deflation since mid-2006. The government also said the economy remains in a difficult situation, while maintaining its overall economic assessment.

In its monthly economic report for November, the government said, "Recent price developments show that the Japanese economy is in a mild deflationary phase." The report said the economy is picking up, but faces difficult situation such as a high unemployment rate.

Earlier today, the Bank of Japan board members unanimously decided to leave the uncollateralized overnight call rate unchanged at 0.1% as expected. Upgrading its assessment, the BoJ said Japan's economy is picking up, although the momentum of self-sustaining recovery in domestic private demand remains weak.

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