The pound dropped today versus the euro and the dollar, before a report, that even if did not come with extremely pessimist numbers, indicated a considerably high public deficit in the country, suggesting that the government may struggle to stabilize the nations finances.
The pound slid versus several currencies after posting multiple days of positive performance mainly against the greenback, but also versus the yen and, to a lower extent, to the euro. Even if the budget deficit published today was lower than expectations, at 13 billion pounds versus 15.7 billion forecast, the number is still very high, and almost doubles the figures for the same month last year, indicating that the British public finances are deteriorating. British finances have been facing a complicated scenario both in the public and financial sector since the credit crunch almost a year ago, and further reports like this are likely to weigh negatively on the pound outlook.
Analysts stress on the fact that public finances are in a long term negative situation, and further readings are likely to indicate pessimistic numbers, even if the current budget deficit is better than the previous one, the numbers are very high if compared to the pre-global slump figures. Currency specialists, in their majority, do not expect the pound to climb much further versus the main currencies.
GBP/USD traded at 1.6414 as of 11:43 GMT after reaching 1.6555 yesterday. EUR/GBP climbed to 0.8663 from 0.8595.
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