By Nicholas Reynolds Feb. 24 (Bloomberg) -- The euro and the pound will “struggle” against other major currencies on concern the European economy will worsen and budget deficits in the region will widen, according to Credit Agricole CIB. The 16-nation euro is likely to encounter so-called resistance around $1.3747 and the pound may drop to $1.5293, said Mitul Kotecha, Hong Kong-based head of global foreign- exchange strategy for France’s largest bank by branches. Bank of England Governor Mervyn King said yesterday there was still “enormous uncertainly” on the road to recovery. “The euro remains the weak link and is set to struggle to make any headway, with upside limited,” Kotecha wrote in a note to clients today. “Similarly the pound is set to struggle in the wake of King’s comments. Asian currencies and commodity currencies look far more resilient.” The euro traded at $1.3544 as of 2:54 p.m. in Tokyo, having fallen 7.1 percent from this year’s high of $1.4579 reached Jan. 13. The pound bought $1.5460 after starting the year at $1.6170. “Overall, the market mood has clearly darkened and there is little to turn sentiment around in the near term,” Kotecha wrote. “The prospect of a likely weak reading for U.S. payrolls next week and continuing worries about European fiscal and debt problems mean any improvement in risk appetite is likely to be limited.” U.S. employers will cut 30,000 jobs this month, after trimming 20,00 positions in January, according to a Bloomberg News survey of economists before the Labor Department releases its non-farm payrolls report on March 5. To contact the reporter on this story: Nicholas Reynolds in Tokyo at rharui@bloomberg.net.

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