FXstreet.com (Barcelona) - The British pound saw very choppy price action on Wednesday and ultimately ended the day as the weakest of the majors. New from the UK was highly disappointing as the country's Debt Management Office, which conducts UK Treasury bond auctions, said that there weren't enough interested buyers for the government's 1.75 billion pound gilt sale.
This is the first time in almost seven years that such an auction has failed, which puts Prime Minister Gordon Brown in a precarious position. Indeed, the UK government wants to try to sell a record 146.4 billion pounds worth of gilts this year and up to 147.9 billion pounds in 2010 so that they can fund the tax cuts and spending efforts meant to dig the UK out of recession.
However, with demand seeming to be lackluster, it will become increasingly difficult and more expensive for the government to fund these efforts, which will force them to either scale back their plans or seeking the help of the IMF, said Terri Belkas, analyst at FXCM.