The pound ended the week close to eight-month peaks against the dollar on Friday as investors pushed back expectations for higher U.S. interest rates and concerns over the Greek debt crisis boosted safe haven demand for sterling. GBP/USD was last at 1.5887 late Friday, holding just below the previous session’s highs of 1.5929, the most since the 12th November. The pair ended the week up 2.07%. Data released on Friday showed that the budget deficit fell to a smaller than forecast £10.1 billion in May from £12.4 billion a year earlier, as income tax revenue climbed. Sterling hit one-month highs against the euro on Friday, with GBP/EUR rising to 1.4033, before pulling back to 1.3990in late trade.
The euro has risen against the dollar in today’s Asian sessions, on a glimmer of hope that Greece may avert a debt default after Athens offered new proposals to foreign creditors ahead of the emergency euro zone summit later in the day. The common currency ticked up 0.3 percent to $1.1383, inching closer to a one-month high of $1.1440 hit on Thursday. But many investors remained cautious because it was not immediately clear how far the new proposals yielded to creditors’ demands for additional spending cuts and tax hikes, nor whether creditors can stomach the offer. After four months of wrangling and with anxious depositors pulling billions of euros out of Greek banks, Prime Minister Alexis Tsipras’ leftist government showed a new willingness at the weekend to make an offer which they hope will unlock frozen aid and avert default. Tsipras will meet European Commission President Juncker, ECB President Mario Draghi, IMF head Christine Lagarde and euro zone finance ministers chairman Jeroen Dijsselbloem at 10 a.m. today. Euro zone finance ministers are due to meet 90 minutes later and a summit of euro zone prime ministers and presidents is also scheduled later in the day. Speculation is rife that, if no deal were reached on Monday, Greece may need to impose capital controls on Tuesday to avert a banking crisis as savers keep withdrawing funds from banks. Bank of Greece Governor Yannis Stournaras met senior bankers on Friday and told them to brace for a “difficult day” on Tuesday if no deal is reached, two bankers at the meeting told Reuters. Against the British pound, the common currency rebounded from Friday’s three-week low of 71.26 pence and last stood at 71.615 pence. Against the yen, the euro gained 0.3 percent to 139.68 yen.
The dollar came under pressure last week after the Federal Reserve lowered both its U.S. growth forecast and its interest-rate projections on Wednesday, prompting investors to push back expectations on the timing of an initial rate hike. Fed Chair Janet Yellen said the central bank wanted to see “more decisive evidence” of sustained growth before raising rates, but acknowledged that the economy has “expanded moderately” after a weak first quarter. The U.S. Dollar Index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell to a five-week low of 93.30 on Thursday, before recovering to end at 94.32 by late Friday. However the index still ended the week down 1.02%, the third straight weekly decline.