Forex – Pound Drops Below 1.20 on Brexit Uncertainty, Euro Weaker

© Reuters. – The British pound fell to its lowest level since October 2016 on Tuesday amid uncertainty as investors waited to see whether lawmakers would be able to block Prime Minister Boris Johnson’s plans to pursue a no-deal Brexit.

Sterling was down 0.71% to 1.1979 by 03:25 AM ET (07:30 GMT), its lowest level since October 2016, extending Monday’s 0.85% fall.

Later Tuesday, lawmakers were to vote on a plan to seize control of the parliamentary agenda on Wednesday to try to pass legislation that would force Johnson to seek a three-month delay to Britain’s EU exit.

Johnson has made it clear that if the government was defeated, it would hold a vote on Wednesday to approve an early election, most likely to be held on Oct. 14.

“Depending on further developments in UK politics, the pound could see sharp moves in the coming week or two. We think it could fall to as low as $1.13 this month,” said Sumino Kamei, senior currency strategist at MUFG Bank.

The common currency fell 0.2% to a near two-year low of 1.0942.

The euro has been pressured lower by expectations that the European Central Bank will cut interest rates further into negative territory next week with economic growth faltering amid a global trade war and Germany’s manufacturing sector already in recession.

In the latest escalation of the trade war, the U.S. on Sunday began imposing 15% tariffs on a variety of Chinese goods, and China began imposing new duties on oil.

Although U.S. President Donald Trump has said both sides would still meet for talks later this month, tensions show little sign of abating.

READ  China's Jingye Group in talks to buy British Steel

The offshore dropped to a record low of 7.1975 per dollar on Tuesday morning while the Australian dollar edged up 0.13% to 0.6719 after the Reserve Bank of Australia kept interest rates on hold overnight.

Still, the stayed within a stone’s throw from a decade-low of $0.66775 hit last month.

–Reuters contributed to this report

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Please enter your comment!
Please enter your name here