* Political uncertainty seen continuing to weigh on sterling
* RBA raises rates by 25 bps to 4.0 pct
* Euro still hobbled by uncertainty over Greece bailout
By Masayuki Kitano
TOKYO, March 2 (Reuters) - Sterling fell on Tuesday, staying
under pressure after hitting a 10-month low the previous day,
while the Australian dollar slipped, giving back earlier gains
made after an interest rate rise by Australia's central bank.
The Aussie had initially climbed after the Reserve Bank of
Australia raised interest rates by 25 basis points to 4.0 percent
and flagged further hikes ahead. [] []
"There is no reason to be surprised that they raised interest
rates at this point," said Kimihiko Tomita, head of foreign
exchange at State Street Global Markets in Tokyo.
"The question is how much further the Australian dollar
should be bought from here," Tomita continued, adding that State
Street's calculations taking into account factors such as
purchasing power parity suggested that the Australian dollar was
overvalued.
There had been some uncertainty about whether the RBA would
raise interest rates on Tuesday because many investors were burnt
after it stunned markets by skipping a hike at its February
meeting.
But given that Australian economic data since then had been
solid overall, especially jobs numbers that showed a surge in
Australian employment in January, the latest rate rise was not a
big surprise, Tomita said.
The Australian dollar advanced as high as $0.9035 <AUD=D4>
after the RBA's rate rise but later gave up its gains and last
stood at $0.8989 <AUD=D4>, down 0.2 percent from late U.S.
trading on Monday.
A sales trader at a U.S. bank said the Aussie ran into
"buy-the-rumour, sell-the-fact" type of offers with market
players trimming long positions in the Australian dollar.
EURO AND STERLING SLIP
The euro and sterling both edged lower, with the euro dipping
0.2 percent to $1.3539 <EUR=>, slipping back towards a nine-month
low of $1.3443 hit on trading platform EBS in February.
Sterling shed 0.4 percent to $1.4935 <GBP=D4>.
On Monday, it slumped to a 10-month low of $1.4781, and
although it later trimmed some losses, still finished the day
down 1.7 percent for its biggest one-day percentage fall in more
than four months.
The outlook for sterling and the euro is unlikely to improve
immediately given the various factors working against them, said
a trader for a European bank.
"Overall, there is still likely to be selling pressure
against the European currencies," he said.
"One of the factors has to do with politics and that is not
something that will disappear in a day or two, so sterling may
remain under selling pressure."
Sterling took a dive on Monday, hurt by factors such as
worries that a UK election due in months could give neither the
opposition Conservatives nor the ruling Labour Party a
parliamentary majority.
Such an outcome could hinder a new government from
effectively dealing with bringing down the UK budget deficit.
Sterling has also been under pressure after Bank of England
Governor Mervyn King said recently that the central bank may
still have to restart its asset-buying programme if the economic
outlook worsens. []
The euro's outlook will turn bearish on weekly Ichimoku
charts if it closes the week below the bottom of the cloud, which
now lies near $1.3600. That could open the way for a fall down
towards $1.3300, where support lies on monthly Ichimoku charts.
The European Union urged Greece on Monday to agree additional
austerity measures within days to tackle its fiscal crisis and
promised to help Athens overcome its debt problems, while the
office of Greek Prime Minister George Papandreou announced a
cabinet meeting for Wednesday to "take decisions about the
economy". []
But market players still doubt whether euro zone countries
such as Germany would agree to help Greece, and remain sceptical
of Greece's commitment to fiscal consolidation, said Tomita at
State Street Global Markets.
"It is a deep-seated problem," Tomita said.
"It is an example of how hard it can be to regain trust once
you lose it," he said.
The dollar rose 0.2 percent against the yen to 89.33 yen
<JPY=>.
(Additional reporting by Satomi Noguchi; Editing by Chris
Gallagher)
