Pound Weakens Amid Risk Aversion Over Trade War Fears
March 07 2018 - 12:25AM
RTTF2
The pound dropped against its major rivals in early European
deals on Wednesday amid risk aversion, as the resignation of White
House chief economic adviser Gary Cohn triggered concerns that
Trump will go ahead with his plan to impose tariffs and risk a
trade war.
Cohn, who was an advocate for free trade, resigned from the job
after a clash with Trump about his protectionist trade
policies.
Renewed worries about the potential impact of a trade war
overshadowed easing geopolitical concerns after North Korea said it
is willing to talk about denuclearization.
Data from the Lloyds bank subsidiary Halifax and IHS Markit
showed that UK house prices grew at the slowest pace in five years
in February.
House prices increased 1.8 percent year-on-year in three months
to February, slower than the 2.2 percent rise registered in
January. This was the weakest rate since March 2013.
The currency has been trading in a negative territory in the
Asian session, with the exception of the greenback.
The pound slid to a 2-day low of 1.2986 against the franc, from
a high of 1.3066 hit at 5:30 pm ET. If the pound falls further,
1.27 is seen as its next support level.
The pound reversed from an early high of 147.51 against the yen,
falling to a 2-day low of 146.23. Next likely support for the pound
is seen around the 144.00 area.
Preliminary figures from the Cabinet Office showed that Japan's
leading index decreased more-than-expected in January to the
weakest level in eight months.
The leading index, which measures the future economic activity,
dropped to 104.8 in January from 106.6 in December, which was
revised down from 107.4.
The U.K. currency edged down to 1.3846 against the greenback,
reversing from an early high of 1.3912. The pound is seen finding
support around the 1.36 region.
The pound weakened to 0.8968 against the euro, its lowest since
November 2017. On the downside, 0.91 is seen as the next support
level for the pound.
Looking ahead, U.S. ADP private payrolls for February, U.S. and
Canadian trade data and U.S. consumer credit, all for January, as
well as Fed Beige book report are scheduled for release in the New
York session.
At 10:00 am ET, the Bank of Canada announces decision on rates.
Economists expect the benchmark rate to remain unchanged at 1.25
percent.
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