2012.07.2307:19:00UTC+00Pound Weakens On Europe Worries

The British pound declined against other major currencies in early European deals on Monday amid escalating Europe debt worries.

Europe's debt woes intensified after Spain's Valencia and Murcia regions asked for financial aid and Greek Prime Minister Antonis Samaras warned the country is facing economic hard times like that which the U.S. faced in the 1930s.

With a review of Greece's progress in meeting bailout conditions remaining still unfinished, the International Monetary Fund said it was no longer willing to extend aid payments to Greece, heightening the risk that the country may become insolvent as early as September.

It is already clear to the troika, comprising the European Union, IMF and the European Central Bank, that Greece will not reach the 120 percent deficit target under the fiscal adjustment program, Germany's Der Spiegel magazine reported, citing unidentified European Union officials.

There were also reports that the European Central Bank will stop accepting Greek sovereign bonds as collateral for refinancing operations pending a review by Greece's international lenders tomorrow.

The pound that ended last week's trading at 1.5627 against the US dollar fell to a fresh 1-week low of 1.5524 in early European deals. The next downside target level for the pound-dollar pair is seen at 1.550.

Against the Japanese yen, the pound slipped to near a 7-week low of 121.17 from Friday's close of 122.66. On the downside, 120.0 is seen as the next target level for the U.K. currency.

The pound declined to 0.7803 against the euro and 1.5399 against the Swiss franc in early European deals, compared to a fresh multi-year high of 0.7761 and a multi-month high of 1.5482, hit respectively in early Asian deals. If the pound weakens further, it will target 0.782 against the euro and 1.538 against the franc. The pound ended last week's trading at 0.7787 per euro and 1.5432 against the franc.

Looking ahead, Eurozone consumer confidence index for July is slated for release at 10 am ET.

There are no major economic reports due from the U.S. today.