U.K.’s Pound: New Budget Deficit Victim?

The U.K.’s currency continued to decline as speculations that a new long term crisis is likely to unfold in Britain as concerns regarding the country’s record budget deficit will be a solid obstacle on the way for economic recovery, setting the pound down mainly versus refuge currencies.

After budget gaps in the Eurozone started to impact the euro’s price last December, the Great Britain is showing itself the new victim of a fiscal crisis that is likely to set the pound to the lowest levels in years. The pound touched the lowest level in more than 2 decades versus the Australian dollar and is declining freely versus the U.S. dollar, emerging market currencies and the safest refuge in forex markets, the Japanese yen, as analysts suggest that the country’s raising budget deficit is likely to force the Bank of England to resume its asset-purchase program, declining massively the appeal for assets in London markets.

It is a fact that the pound is likely to join the euro on a very bump road ahead, as neither the ECB nor the BOE have a feasible plan to tighten their budgets gaps for the time being. Don’t be surprised if the pound starts to flirt with the lowest rate in years versus its main rivals.

GBP/USD traded at 1.5247 as of 00:22 GMT from a previous intraday rate of 1.5388.

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