Pound Weakens Amid Risk Aversion On Trade Worries
10 Gennaio 2019 - 6:25AM
RTTF2
The pound declined against its major counterparts in the
European session on Thursday amid risk aversion, as optimism
surrounding U.S.-China trade talks evaporated and weak earnings
results dragged down retailers.
Although trade talks reportedly ended on a positive note on
Wednesday, it remains to be seen if China had offered enough
concessions on structural issues to overcome U.S. skepticism.
China's ministry of commerce said that the negotiations were
"extensive, deep and meticulous".
The U.S. government shutdown entered the 20th day, after Trump
walkout from the meeting with House Speaker Nancy Pelosi and Senate
Minority Leader Senator Chuck Schumer at the White House on
Wednesday.
While Trump called the meeting "a total waste of time,"
Democrats blamed him of throwing a "temper tantrum."
Investors awaited the Brexit process, after U.K. Parliament
demanded the May government to work on a plan B should her Brexit
deal is voted down next week.
On Wednesday, the Parliament carried out an amendment, which
forces May to come up with an alternative plan within three working
days after next week's vote, instead of the 21-day time limit set
out in the Withdrawal Act.
The pound dropped to 1.2747 against the greenback, from a high
of 1.2801 hit at 7:00 pm ET. If the pound falls further, 1.25 is
possibly seen as its next support level.
The pound depreciated to a 6-day low of 137.60 against the yen
and held steady thereafter. The pound is seen finding support
around the 134.00 region.
Preliminary data from the Cabinet Office showed that Japan's
leading economic index dropped to a two-year low in November.
The composite leading index fell to 99.3 in November from 99.6
in October. Economists had expected the index to remain unchanged.
The pound slipped to a weekly low of 0.9053 against the euro, from
yesterday's closing value of 0.9026. The next possible support for
the pound is seen around the 0.88 level.
The U.K. currency that ended yesterday's trading at 1.2460
against the franc declined to a weekly low of 1.2419. The pound is
likely to find support around the 1.22 region.
Looking ahead, the European Central Bank's minutes from December
12-13 meeting are due at 7:30 am ET.
In the New York session, U.S. weekly jobless claims for the week
ended January 5, Canada building permits and house price index for
November are scheduled for release.
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