U.K. Pound Declines Amid Speculation Bank Losses are Spreading

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By Lukanyo Mnyanda

The pound declined against the euro and the dollar after the Sunday Times reported that Lloyds Banking Group Plc may announce further losses, stoking speculation the worst of the recession hasn’t passed.

The British currency fell to the weakest level in a month versus the euro and headed for a second day of losses against the dollar as the FTSE 350 Banks Index declined 1.2 percent and U.S. stock futures dropped for a second day. U.K. gilts rose as investors sought the relative safety of fixed-income assets.

“Banks have been less in the center stage in the past few months or weeks, and this is a reminder,” said Jeremy Stretch, a senior strategist at Rabobank International in London. “Stock futures are also heavily under water and risk appetite has been a key constituent of sterling performance.”

U.K. Pound Declines Amid Speculation Bank Losses are Spreading - Bloomberg.com