Yesterday, UK pound gained solidly against the euro, but today some of those gains are being given back. UK pound is lower on a combination of risk aversion, as well as concerns as British politicians consider the effects of British isolation from the rest of the eurozone.
Yesterday, Deputy Prime Minister Nick Clegg worried that Prime Minister David Cameron‘s veto of a new European Union treaty left Britain isolated from the rest of Europe. Cameron refused to sign the treaty, which imposed hefty financial regulations, and would have impact London quite a bit.
Concerns that the European Union would exclude Britain from further planning were raised by Clegg. Cameron, however, insists that the members of the European Union won’t be able to go behind their backs, and that Britain can remain vigilant in ensuring that the European Union remains on task.
For now, the UK pound is down against other majors, falling against low beta currencies like the US dollar and the Japanese yen, as well as dropping against the euro. Concerns about Britain’s exposure to European troubles, especially since yesterday’s French bond auction failed, UniCredit shares had to stop trading, and Spain’s government is demanding a high level of bank capitalization, is a factor in a lower sterling.
At 14:22 GMT GBP/USD is lower at 1.5437, down from the open at 1.5495. GBP/JPY is down to 119.0485 from the open at 119.5150. EUR/GBP is higher at 0.8259, up slightly from the open at 0.8253
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