The pound strengthened against the euro after Greece’s budget deficit for last year was revised upward by European Union authorities, boosting demand for the relative security of Britain’s currency. Sterling depreciated against the dollar for a second day. The Greek budget shortfall last year was revised to 15.4 percent of gross domestic product from 13.6 percent, the Eurostat statistics office said in a report today. The nation’s debt was revised to 126.8 percent of GDP from 115.1 percent. “Markets are just not going to take it very well in terms of where the euro zone is positioned right now, so we could be seeing relative value flows coming out of the euro zone and into sterling,” said Geoffrey Yu, a foreign-exchange strategist at UBS AG in London. “The relative growth and debt differentials are just becoming wider and wider by the day.” The pound rose 0.2 percent against the euro to 84.85 pence at 12:20 p.m. in London. It fell 0.3 percent versus the dollar to $1.6072. Questions about the accuracy of Greek data have undermined the credibility of EU budget rules, which call for euro members to keep their shortfall at less than 3 percent of GDP. The total budget gap for the 16-nation euro region widened to 6.3 percent in 2009, the largest in the shared currency’s history. Today’s revisions also mean Greece won’t achieve the target agreed to in return for 110 billion euros ($150 billion) in emergency loans. Gilts Drop Sterling slipped versus the greenback ahead of reports forecast to show U.S. retail sales and consumer prices improved. Such data would add weight to earlier reports that suggest the U.S. recovery picked up at the start of the fourth quarter. The pound has declined 2.8 percent against a basket of currencies in 2010, Bloomberg Correlation-Weighted Currency Indexes show. U.K. government bonds fell, pushing the 10-year yield up 3 basis points to 3.23 percent. The two-year note yield was little changed at 1.05 percent. Gilts have returned 7.4 percent this year, compared with an 8 percent gain for German bonds and a 7.8 percent increase for U.S. Treasuries, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. To contact the reporter on this story: Lucy Meakin in London at lmeakin1@bloomberg.net. To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net.

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