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Forex - GBP/USD remains lower on Greece worries

Published 02/21/2012, 10:36 AM
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Investing.com - The pound remained lower against the U.S. dollar on Tuesday, as investors were concerned that Greece’s recently approved bailout deal will not be enough for the country to overcome its debt crisis.

GBP/USD hit 1.5773 during U.S. morning trade, the pair’s lowest since February 16; the pair subsequently consolidated at 1.5798, shedding 0.33%.

Cable was likely to find support at 1.5789, Friday’s low and resistance at 1.5904, the high of February 7 and an almost three-month high.

Sentiment strengthened earlier after euro zone finance ministers agreed to the details of a new financial package for Greece, which will reduce the country’s debt to 120.5% of gross domestic product by 2020.

Private-sector creditors also agreed to take a write-down on their bonds of more than 53%, which is expected to cut Greece's debt by EUR107 billion.

But investors were cautious amid concerns that a general election in Greece, which is expected to take place in April, could result in problems implementing the terms of the package.

Meanwhile, a report on the sustainability of Greece’s debt by the Troika, which is composed of the European Union, European Central Bank and the International Monetary Fund, said that "additional debt relief" will be required in the future.

Earlier in the day, official data showed that U.K. public finances recorded their largest monthly surplus since January 2008 last month.

Public sector net borrowing or the difference in value between public spending and income swung to a surplus of GBP10.7 billion in January, from a deficit of GBP11.1 billion the previous month.

Elsewhere, the pound was also lower against the euro with EUR/GBP rising 0.45%, to hit 0.8393.

Also Tuesday, Germany’s Finance Minister, Wolfgang Schaeuble said that the IMF could contribute as much as EUR23 billion to the Greek rescue package, but added that a final decision would be taken at a meeting next week.


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