The pound continued to decline today versus most of the 16 main traded currencies on concerns that Lloyds Plc financial conditions are far from being sustainable, increasing speculations that the British banking sector may delay an economic recovery in the country.
The U.S. dollar touched a two-weeks high versus the pound as the Lloyds Banking Group Plc affirmed that it may exit a government program to insure other positions, leaving room for suspicions that one of the main British banking groups is having a hard time to stabilize its accounts. The euro also gained versus the British currency, touching the 90 pence level for the first time in 5 months, as the Eurozone is providing traders with more solid evidences of recovery, raising attractiveness for the euro in the regional aspect. The yen also pared most of its losses versus the pound this week, as today, the demand for high-yield declined slightly.
The financial scenario in Great Britain still is far from optimistic, considering it was one of the countries with the most liberal policy towards loans before the crisis, facing the biggest issues when the credit crunch struck the world last year. Domestic problems and international optimism can lead the pound to lose further versus majors, and it is not impossible that, in the medium term, the pound will trade in equality to the euro.
EUR/GBP traded at 0.8987 as of 11:18 GMT from a previous rate of 0.8905 yesterday. GBP/USD traded at 1.6356 from 1.6537.
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