Pound falls for fourth successive week on budget deficit fears

London: The pound fell for a fourth consecutive week against the euro, the longest run of declines since July, on concern the next UK government may not be strong enough to cut the country's burgeoning budget deficit.

Sterling weakened to 91 pence per euro for the first time in a week on March 10. Britain's government needs to accelerate trimming its budget shortfall, Fitch Ratings said the day before. The pound rose against the dollar on Friday, snapping a three-week drop, after a report showed house prices in England and Wales increased last month at the fastest pace in more than seven years.

"Near-term direction in sterling is being driven by the ongoing dynamics of political concerns and rating agencies," said Jeremy Stretch, senior currency strategist at Rabobank International in London.

Struggle

The pound weakened about 0.6 per cent against the euro in the week to 90.58 pence per euro in London on Friday. The UK currency climbed 0.3 per cent against the dollar to $1.5187. It weakened to $1.4784 on March 1, the lowest level since May.

Concern the UK may struggle to reduce its budget gap has helped the pound fall 2.2 per cent against the euro this year.

At more than 12 per cent of gross domestic product, the UK budget shortfall is on a par with that of Greece.

Chancellor of the Exchequer Alistair Darling said two days previously that the budget on March 24 won't contain pre-election giveaways.

Britain should reduce its deficit to 3 per cent of gross domestic product by 2014-15, instead of the planned 4.4 per cent, Fitch said.

Adjustments to revenue and spending plans are taking place at a "pedestrian pace", Brian Coulton, head of global economics at Fitch, said in a London presentation.