Pound Near 2 1/2 Year Low, Economy Contracts

The pound traded near a 2 1/2-year low against the dollar as the National Institute for Economic and Social Research said the U.K. economy is contracting for the first time in at least a decade.

Gross domestic product in Europe's second-largest economy dropped 0.2 percent in the three months through August, and fell 0.1 percent in the quarter through July, the group, whose clients include the Bank of England and the U.K. Treasury, said today. The May-to-July estimate, revised today, was the first decline since Niesr began its measure in April 1996, it said.

Against the dollar, the pound traded at $1.7671 by 9:10 a.m. in London, from $1.7607 yesterday. It slipped to $1.7471 two days ago, the weakest since April 2006. The U.K. currency was at 80.16 pence per euro, from 80.27, after dropping to a record low of 81.88 on Sept. 4.