Forex – Dollar Weakens While Pound Holds Gains Ahead of New Brexit Vote

© Reuters. — The euro hit a two-week high against the dollar in early trading in Europe Monday, as the greenback continues to suffer from weak economic data out of the U.S. on Friday that strengthened expectations for a Federal Reserve interest rate cut later this year.

Futures contracts on dollar interest rates are now indicating a 40 percent chance of a cut by the Fed later in 2019, despite assurances from many of its officials that the economy is still robust. However, a mixed labor market report, a lack of visible progress in ending the U.S.-China trade war and a sharp drop in manufacturing activity in February have all suggested that the slowdown seen at the end of 2018 may extend well into the current year.

At 03:55 AM ET (07:55 GMT), the euro was at $1.1349, just off a two-week high posted earlier. The British pound was holding on to most of last week’s gains at $1.3285, as Prime Minister Theresa May prepares to push her EU Withdrawal Bill through parliament for the third time by trying to win over the Northern Irish Democratic Unionist Party.

Most analysts expect the bill to fail again, which would effectively force May to ask for an extension to the March 29 deadline for Brexit.

The , which measures the greenback against a basket of six major currencies, fell below 96.00 for the first time this month to stand at 95.88.

The Fed’s policy-making meets on Tuesday and Wednesday, and chairman Jerome Powell will be asked afterwards whether ‘patience’ – a byword for holding off from further rate hikes – is enough to support the economy any more.

Central banks across the world will be chiming in on the outlook for their economies this week: the and will both meet on Thursday, while will follow on Friday. The Philippines, Indonesia and Thailand also hold central bank meetings this week.

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