Pound climbs as euro zone wrestles with political tumult

Posted On: February 04, 2013

The English pound rose from its 15-month trough against the shared currency of the European Union on Monday as Spanish and Italian bonds endured pressure in the aftermath of scandals in two of the euro zone's larger economies, according to Bloomberg.

Mariano Rajoy, prime minister of Spain, is confronting calls to resign from opposition leaders after a published report noted he and members of his party accepted illegal payments amounting to bribery. Spain's economy is the fourth-largest within the 17-nation region.

"The pound is stabilizing after heavy selling last week," currency strategist Lee Hardman with Bank of Tokyo-Mitsubishi UFJ Ltd. in London told the news source on Monday. "A lot of the bad news is already in the price but the weakening trend remains in place."

Thus far this year, the English pound has lost 3.8 percent of its value against the U.S. dollar on foreign exchange markets, emerging as the second-worst performer. It trails only the Japanese yen, which has been subject to aggressive monetary stimulus policies.

An election in Italy, the euro zone's third-largest economy, is about 21 days away and former Prime Minister Silvio Berlusconi is closing the gap against the front runner, according to The Independent. Berlusconi is awaiting an appeal of a four-year prison term for tax fraud.
 

Category: Industry News

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