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Dollar at 23-year high vs pound,6-week high vs euro

NEW YORK - The dollar rose to a 23-year high against sterling and six-week high against the euro on Friday as weak UK and euro zone data and global economic concerns kept investors risk averse.

With no major U.S. data scheduled for release, investors took their cue from the UK and euro zone.

The UK and euro zone currencies fell to session lows after data showed the UK economy contracted by 1.5 percent in the fourth quarter, far more than analysts had expected and confirming a recession.

Investors took little encouragement from surveys showing the euro zone manufacturing and services sector contracted at a slightly slower pace in January, since they remain deep in recessionary territory.

The yen jumped on the back of its perceived safe-haven status, hitting record highs against the pound and nearing seven-year highs against the euro.

“The U.S. dollar and Japanese yen are higher against the major and most emerging currencies as they continue to benefit from the weak financial and economic environment,” said Marc Chandler, global head of currency strategy at Brown Brothers Harriman in New York, in a research note to clients.

The euro fell 1.4 percent against the dollar to $1.2808, earlier touching a six-week low of $1.2766. The pound tumbled on the day to hit another 23-year low of $1.3502 before recovering to $1.3629, down 1.7 percent on the day.

The dollar was also supported by comments from U.S. Treasury Secretary nominee Timothy Geithner, who said a strong dollar is in the United States’ interest.

His remarks came on Thursday when he won the Senate Finance Committee’s backing to head the U.S. Treasury.

The yen enjoyed strong gains, with the dollar down 0.1 percent at 88.69 yen in early New York trade, while the euro lost 1.6 percent at 113.54 yen, close to a seven-year low just above 112 yen.

The pound also hit a record low against the yen of 118.87, according to Reuters data.

Pound tumbles

Sterling has come under severe pressure recently as worries about a very weak economy have combined with concerns about the UK’s troubled banking sector and the parlous state of government finances.

Traders said the yen remained well-bid as a relatively safe currency because investors’ risk aversion remained elevated on worries about the deepening global recession.

This weighed on riskier and higher-yielding currencies, with the Australian dollar touching its lowest against the U.S. dollar since early December at $0.6420.

Market players were on the lookout for any comments from Japanese authorities about possible currency intervention to stem the yen’s rise.

Worries also are growing about the possibility that the Swiss National Bank could intervene to weaken the Swiss currency, which, like the yen, has gained as investors seek safer assets.

“If euro/Swiss franc moves into the 1.43 franc area, the SNB will become more vocal on this issue,” BNP Paribas currency strategist Ian Stannard said in London.

The euro was trading down 0.2 percent at 1.4978 francs. Dollar/Swiss franc was up 1.3 percent at 1.1691 francs.