UK’s sterling continued to creep higher against its major rivals in early Asian trading on Tuesday as worries about Greece’s ability to reduce its budget deficit have put some pressure on the common currency, which may be driving traders to turn to the pound as safe haven.
The pound surged to a fresh 4-month high against the euro, 6-week high against the US dollar, 4-week high against the Swiss franc and a 4-day high against the Japanese yen.
Finance ministers from the 16 euro nations met in Brussels today as Greece struggles to cut a budget deficit of 12.7 percent of gross domestic product—the highest in the euro-area. European finance chiefs said Greece may have to step up its efforts to tackle a national fiscal crisis that threatens to spread to other countries across the region.
Last week, Greece presented its plan to push down a budget deficit from 12.7 percent to 8.7 percent by the year end. The rating agency Moody’s said in the previous week that the Greek economy may face “slow death” as they dedicate a higher proportion of their wealth to paying off debt.
Analysts warned that the chaos in Greece threatens to weaken the euro for much of 2010 while the pound is expected to gain ground as the British economy recovers.
Extending its 7-day winning streak, the pound advanced to a new 4-month high of 0.8776 against the euro around 8:00 pm ET and the pair leveled off thereafter. On the upside, the sterling may find target around the 0.873 level. Currently, the euro-pound pair is trading at 0.8777.
Against the US dollar, the pound surged to a 6-week high of 1.6421 at this time and the next upside target for the cable is likely to be seen around the 1.65 level. The pound is presently worth 1.642 per greenback.
The pound climbed to a 4-week high of 1.6818 against the Swiss franc at this time and if the pair gains further, resistance is seen around the 1.684 level. The pound-franc pair is presently trading at 1.6817.
The pound also advanced against the Japanese yen at this time, staying above the 149.0 level. This set the highest level for the pair in 4 days and the next likely resistance for the pair is seen around the 150.2 level. Currently, the pound-yen pair is quoted at 148.9.
Looking ahead, Japan is set to release its consumer confidence data for December, shortly.
Turning to the European session, the UK consumer price and retail price indexes for December are scheduled for release at 4:30 am ET. Besides, the euro-zone zew survey results for January and construction output for November are also due out in the session.
Turning to the U.S., the Treasury Department is due to release a report on the flows of financial instruments into and out of the U.S. for November at 9:00 AM ET.
The National Association of Homebuilders’ is scheduled to release the results of their survey on homebuilders’ confidence at 1:00 PM ET.