The pound weakened against other major currencies in early deals Monday as risk sentiment faded ahead of the euro area finance ministers meeting in Brussels today.
Lingering uncertainty over the disbursement of the next tranche of aid to debt-laden Greece and worries about the U.S. fiscal cliff also prompted traders to flee from risk-associated assets.
Although the Greece crossed the crucial precondition hurdles set by the country's creditors to secure the next bailout tranche by approving the 2013 budget with spending cut measures, the euro area finance ministers are not likely to decide on the 31.5 billion euros payment to Greece.
Bears dominated in the market as optimism over healthy Chinese trade data was offset by the negativity triggered by figures showing Japan's economy contracted in the latest quarter.
China posted a merchandise trade surplus of $31.99 billion in October, blowing past expectations for $27.15 billion. Exports surged 11.6 percent year-over-year to $175.57 billion, beating forecasts for a 10 percent gain.
Japan's economy shrank 0.9 percent in the third quarter of 2012 compared to the previous three quarters, marking its first contraction in three quarters, the Cabinet Office said in a report. On a yearly basis, GDP dropped 3.5 percent, slightly worse than expectations for a contraction of 3.4 percent.
The British currency reached 1.5873 against the US dollar around 7:00 am ET, its weakest level since September 5. The cable has been trading lower since the key 1.6300/15 resistance had broken in September and depreciated almost 2.7 percent thus far. The next key level to watch for the pair is seen at 1.5825/30.
The sterling also drifted lower against the yen Monday morning, falling as low as 126.07 around 7:05 am ET, down 50-pips or 0.40 percent from a session's high of 126.57. The pound-yen pair is poised to revisit Friday's low of below 126.0 level and a move below this mark could set its lowest level in 4-weeks.
The pound fell to 5-day lows of 0.8014 against the euro and 1.5049 against the Swiss franc around 6:20 am ET Monday. On the downside, the sterling may find target levels at 0.8020 against the common currency and 1.5040 versus the Switzerland unit.
Germany's wholesale price inflation accelerated to the highest level in eleven months in October, data released by the Federal Statistical Office showed today.
The wholesale price index increased 4.6 percent on an annual basis in October, faster than the 4.2 percent gain seen in September. Economists were looking for a 4.9 percent rise.
On a monthly basis, wholesale prices decreased a seasonally adjusted 0.6 percent in October, faster than the 0.3 percent decrease economists had forecast.
