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Account Deficit, Market Worries Weigh on UK Pound

March 14, 2014 at 13:43 by Miranda Marquit

Close-up of the UK pound noteUK pound is lower today, thanks in large part to its account deficit and to market worries surrounding the events unfolding in Crimea. With stocks plunging and concerns about what’s next causing uncertainty, combined with issues in the United Kingdom, the pound isn’t on very stable ground.

Sterling is lower today, dropping against most of its major counterparts. Risk appetite is hard to find today as stock markets around the world struggle. UK pound is tied to stock performances, and the upheaval isn’t good for the pound. Worries about Crimea predominate, since there are concerns that a referendum in favor of joining Russia could change the economic and political balance in Europe — especially since many countries have doubled-down on their insistence that Russia stay out.

Also weighing on the pound is the fact that the account deficit continues to cause problems. According to the Office for National Statistics, the trade gap widened from 7.7 billion pounds in December to 9.8 billion pounds in January. This gap has many at the Bank of England concerned, and this is one of the reasons for a floundering pound.

At 13:41 GMT GBP/USD is down to 1.6601 from the open at 1.6624. EUR/GBP is up to 0.8375 from the open at 0.8342. GBP/JPY is down to 168.4200 from the open at 169.2850.

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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