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Pound Drops as U.K. May Become Next Object for Budget Concern

April 12, 2010 at 19:28 by Vladimir Vyun

Great Britain poundThe Great Britain pound’s strength was curbed by the speculation that that the U.K. will be the next target for the concerns about the major budget deficit as the worries about the Greek budget are retreating because the Greece’s crisis appears to be resolved.

The rescue package, issued by the European Union and priced as much as 45 billion euros (or $61 billion), eased concerns about the ability of Greece to deal with its debt and made traders to look for another country with fiscal crisis severe enough to damage the economy and hurt its currency. And it seems that such country should be the U.K. with its deficit climbing as high as 11.8 percent of gross domestic product the last fiscal year and closing near the Greek budget shortage, that of 12.9 percent in the previous year.

The analysts consider the economic situation in the Britain to be worse than in Italy, Spain and Portugal. And a prospect for the improving situation is not supported by the opinion polls, which suggest that the forthcoming election may result in stalemate, leaving the country without the government strong enough to deal with the budget shortage.

GBP/USD traded at 1.5378 as of 17:28 GMT down from the opening price of 1.5448. EUR/GBP traded near 0.8830 after it opened at 0.8821

If you have any questions, comments, or opinions regarding the Great Britain Pound, feel free to post them using the commentary form below.

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