The pound fell against the dollar and the euro as the resignation of two more U.K. ministers increased the crisis in Prime Minister Gordon Brown’s government. The pound headed for its biggest weekly decline since April versus the dollar after Defence Secretary John Hutton stepped down today, following Pensions Minister James Purnell late yesterday. The dollar was little changed against the euro and the yen before a report that may show U.S. unemployment rose at a slower pace in May, reducing demand for the currency as a haven. The Swedish krona fell for a third day in four versus the euro on concern Latvia will devalue the lats. “Brown is creating political uncertainty, never a good thing for a currency,” said Neil Jones, head of European hedge- fund sales at Mizuho Corporate Bank Ltd. in London. “The pound is currently a sell” and is likely to move below $1.60 and 89 pence per euro today. The pound weakened to $1.6092 as of 6:49 a.m. in New York, from $1.6175 yesterday, and 88.09 pence per euro, from 87.68 pence. The dollar traded at $1.4173 per euro from $1.4183 and 96.85 yen from 96.58. The euro rose to 137.20 yen from 136.97. Purnell told Brown yesterday the prime minister is leading the Labour Party to electoral defeat and should quit. His announcement came after polls closed in local and European Parliament elections. Early counting showed that with 213 of 2,000 results declared, Labour had lost 23 seats. The Australian and New Zealand dollars gained as commodity prices rose, with oil advancing to the highest level since November. The aussie, as Australia’s currency is known, climbed to 80.40 U.S. cents, from 80.18 cents. The kiwi, New Zealand’s currency, added 0.3 percent to 63.62 U.S. cents. U.S. Payrolls “We are looking at a better day in the market” for higher-yielding currencies, said Tony Morriss , a senior markets strategist at Australia & New Zealand Banking Group Ltd. in Sydney. Even a “bad” jobless rate in the U.S. won’t overwhelm the optimism about the global economy, he said. U.S. non-farm payrolls dropped by 520,000 in May, according to the median estimate of 76 economists surveyed by Bloomberg News, compared with a 539,000 decline in April. The jobless rate in the world’s largest economy still rose to a 25-year high of 9.2 percent last month, another U.S. report will show, according to a separate Bloomberg survey. “Today’s U.S. payroll data will be a key factor for the market,” said Steven Barrow, head of Group of 10 foreign- exchange research in London at Standard Bank Plc. “Payrolls seemed to hit the worst point, in terms of the size of employment losses, in January and since then things have been slowly improving.” Latvia, suffering the severest recession in the European Union, is struggling to rein in its budget deficit in order to secure continued payment of an international bailout. ‘Inevitable’ Devaluation Swedbank AB is ready for a potential devaluation of the lats, Chief Executive Officer Michael Wolf wrote in a statement published on its Web site yesterday. Latvia’s central bank pledged to defend the currency peg to the euro after some investors shunned assets linked to the Baltic nation on concern its economic collapse will lead to a devaluation of the lats. “Devaluation in Latvia is eventually almost inevitable,” said Oliver Weeks, an economist in London at Morgan Stanley. “Scandinavian banks will be affected by the wave of defaults.” The Swedish krona weakened 1.3 percent to 10.9643 per euro, from 10.8187 yesterday, when it reached 10.9842, the weakest level since April 23. Russian President Dmitry Medvedev used a newspaper interview to question the U.S. dollar’s future as a global reserve currency. He said using a mix of regional currencies would make the world economy more stable and that Russia may consider ruble-yuan swaps. The dollar “is not in a spectacular position, let’s be frank, and its prospects cause various questions as do the prospects for the global currency system,” Medvedev, who today hosts an international economic forum in St. Petersburg, said in an interview with the Moscow-based Kommersant newspaper.

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