British Pound Weakens Versus Dollar as Greece Forces Losses on Investors

The pound fell for the first time in three days against the dollar after Greece forced investors to take losses on holdings of the nation’s bonds, damping demand for assets linked to European growth.

Two-year note yields headed for a second weekly advance as a report showed U.S. payrolls rose more than economists estimated in February. The euro fell after Greece invoked powers known as collective action clauses to boost investor participation in its government bond swap.

“The euro is encountering some profit taking and the pound is just matching that euro softness,” said Michael Derks, chief strategist at FXPro Financial Services Ltd. in London. “A good result from Greece had been priced in.”

The pound fell 1 percent to $1.5677 at 5:05 p.m. London time and headed for a 1 percent weekly decline. Sterling was 0.3 percent stronger at 83.62 pence per euro. The 17-nation common European currency was 1.3 percent weaker at $1.3107.

The International Swaps and Derivatives Association is due to rule whether a “potential credit event” occurred relating to Greece, following the results of the nation’s private-sector involvement plan. Determining that it constitutes a restructuring credit event would cause a payout of swaps insuring the securities Greek government bonds

Key Resistance

The pound may fall to $1.5645 if it fails to rise through a key resistance level, according to Fabien Manac’h, a technical analyst at Societe Generale SA in Paris, citing trading patterns.

“We expect the $1.5880-$1.5885 resistance zone to contain any other upward attempt and force pound-dollar to head south again,” he wrote in a note to clients.

The $1.5880-$1.5885 level represents the so-called long- term resistance line, Manac’h wrote. A resistance level refers to an area on a chart where analysts anticipate sell orders are clustered.

Sterling has dropped 1.1 percent this year, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-nation currencies. The dollar weakened 2.1 percent and the euro fell 0.8 percent.

Two-year U.K. government notes were little changed after a report showed the U.S. created 227,000 jobs in February. The median projection in a Bloomberg News survey called for a 210,000 rise.

The yield on the security maturing in March 2014 was at 0.44 percent, up from 0.39 percent a week earlier.

Gilts have handed investors a 0.9 percent loss this year, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. U.S. Treasuries have dropped 0.5 percent and German government bonds have gained 0.3 percent.

The 10-year gilt yield, at 2.15 percent today, has fallen from 3.13 percent on March 9, 2009, when the global bull market in equities began. The pound has gained 11 percent against the dollar and euro in the period.

To contact the reporter on this story: David Goodman in London at

To contact the editor responsible for this story: Daniel Tilles at

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