By Neil Shah The U.K. pound is struggling today as worries about Britain’s fiscal future mount, and it’s unlikely the burdens weighing down the currency will be lifted anytime soon. On Friday, the U.K. currency is down about 1% against the U.S. dollar to $1.5395 from $1.5552 yesterday in New York, taking its losses for the year to nearly 5%. Despite continued concerns about the debt troubles of Greece and other nations on the periphery of Europe, the euro is also notching gains about sterling: The euro is up 0.9% today. Of course, sterling isn’t alone in falling today -– many currencies are losing their edge against the greenback in the wake of the U.S. Federal Reserve’s surprise decision to raise its so-called discount rate –- but sterling’s pain is worse. The reason: A steady drumbeat of bad news on the economic data front. Today, investors were surprised by a bad batch of January retail sales data. Sales figures, especially for food items, were unusually weak due to the cold snap in Britain and the expiry of a recent sales-tax cut. Yesterday, Britain unveiled its first budget deficit for January –- typically a cash-rich month for the government –- since records began in the early 1990s. Bad unemployment data earlier in the week kicked off the pain. All these data point to how fragile Britain’s economic recovery is and remind investors that U.K. politicians –- whoever wins the coming elections –- face a tough balancing act. On one hand, investors in the bond market and international ratings agencies want the U.K. to produce a credible plan for paring its large budget shortfall. That would likely involve cutting public spending or raising taxes, or both. On the other hand, Britain’s economy remains relatively weak and could fall back into recession precisely because of such belt-tightening measures. The devil is in the details, of course. But for now, what we have is uncertainty, and that’s not great for currency investors.

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