Pound Slides On Brexit Worries
09 Luglio 2019 - 10:00AM
RTTF2
The pound drifted lower against its key counterparts in the
European session on Tuesday, amid fears over a no-deal Brexit and
mounting signs of slowing economy.
Concerns over a no-deal Brexit intensified as Boris Johnson, the
front-runner to become Britain's next prime minister, remarked that
he would take the U.K. out of the European Union on October 31
"come what may".
"We need a change of direction. That's why we must treat October
31 as a real deadline for leaving the EU, come what may, not a fake
one," he wrote yesterday.
Market participants are placing a 95 percent possibility of
Johnson becoming PM.
The currency was further weighed by risk aversion, as European
stocks fell after losses in Apple shares pressured the broader tech
sector on Wall Street overnight and chemicals major BASF warned
profits would nearly halve in the second quarter.
Caution prevailed ahead of Fed Chairman Jay Powell's two-day
testimony to Congress on Wednesday and Thursday, with markets
waiting to see whether the language will be dovish enough after the
release of a stronger-than-expected jobs report.
Data from the British Retail Consortium showed that UK retail
sales logged its worst June on record.
Like-for-like sales decreased 1.6 percent year-on-year in June,
slightly larger than the 1.5 percent fall economists had expected.
Total sales were down 1.3 percent.
The currency has been trading lower against its major
counterparts in the Asian session, excepting the euro.
The pound dropped to a 4-day low of 1.2381 against the franc,
after having risen to a weekly high of 1.2451 at 9:00 pm ET. The
next possible support for the pound is seen around the 1.21
level.
Data from the State Secretariat for Economic Affairs showed that
Switzerland's unemployment rate remained unchanged in June.
The jobless rate came in at seasonally adjusted 2.3 percent in
June, unchanged from May. Economists' expectation was 2.4
percent.
The pound fell to 1.2452 against the dollar, a level unseen so
far this year. The pound is seen finding support around the 1.23
region.
Reversing from a weekly high of 136.28 set at 8:45 pm ET, the
pound slipped to a 4-day low of 135.50 against the yen. On the
downside, 34.00 is possibly seen as the next support level for the
pound.
Data from the Ministry of Health, Labor and Welfare showed that
Japan total labor cash earnings fell for the fifth straight month
in May.
Total cash earnings fell by less-than-expected 0.2 percent
year-over-year in May, following a revised 0.3 percent decline in
April. Economists had expected a 0.6 percent decrease.
The pound weakened to 0.8996 against the European currency for
the first time since January 7. This follows a session's high of
0.8954 set at 5:00 pm ET. If the pound extends decline, 0.92 is
possibly seen as its next support level.
Looking ahead, Canada housing starts for June and building
permits for May are scheduled for release in the New York
session.
Federal Reserve Chairman Jerome Powell will give opening remarks
at an event hosted by the Federal Reserve Bank of Boston at 8:45 am
ET.
Federal Reserve Bank of St. Louis President James Bullard is set
to speak at the Official Monetary and Financial Institutions Forum
Meeting in Saint Louis at 10:10 am ET.
At 2:00 pm ET, Federal Reserve Governor Randal Quarles will
deliver a speech about stress testing at an event hosted by the
Federal Reserve Bank of Boston.
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