The Great Britain pound fell against the US dollar and the Japanese yen this week as growing concerns about the health of the UK economy reduced appeal of the currency. The sterling is still perceived as refuge from Europe’s crisis, therefore it gained versus the euro.
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Britain’s economy has entered a recession, significantly hurting prospects for the sterling. The Bank of England refrained from expanding stimulus during its last policy meeting, but most economists agree that the country needs quantitative easing. The pound is supported by its status of a safe haven, but such role looks tenuous considering the economic condition of Britain. Anyway, the problems of Europe allowed added to Britain’s strength against commodity currencies of countries that depend on European demand for their exports.
The pound was drifting down against the greenback and the yen since the end of March and it extended this trend for this week. The euro rose on Friday, but that did not help the shared 17-nation currency to erase its losses versus the sterling. The Canadian dollar was more successful, ending the week almost flat after falling for six consecutive trading sessions.
GBP/USD slid from 1.6133 to 1.6070 and GBP/JPY fell from 128.78 to 128.43. EUR/GBP was down from 0.8062 to 0.8033, while during the week it has reached 0.7994 — the lowest since 2008. GBP/CAD climbed from 1.6067 to 1.6201, but retreated to 1.6076 by the weekend.
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