Budget Deficit Sets Pound to Sharp Fall

The British pound had another week of losses versus currencies from its main trading partners as the emerging budget deficit problems in the country are affecting market confidence among traders, shunning capital from the country towards other more favorable investment opportunities.

The recession in the U.K. last year was the deepest in the country since official numbers started to measured, and as the government spending is growing without significant improvements in the British economy, traders are becoming more and more skeptical towards assets in Britain, which made the pound to post a drop versus all of the 16 main traded currencies in February, even versus the euro, since the Eurozone is facing also a severe budget deficit crisis.

Speculations involving the Bank of England and its measures to tighten the country’s budget deficit are pushing the pound down, as a number of traders expect that premature attitudes from central bankers may plunge the U.K. in a longer recession, which would make the pound to reach new record lows.

GBP/USD ended this week at 1.5232 from as high as 1.5475.

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