Sterling drops on Brexit fears, trade tensions boost dollar

[webfact]

Sterling drops on Brexit fears, trade tensions boost dollar

By Karen Brettell

 

FILE PHOTO: U.S. dollars and other world currencies lie in a charity receptacle at Pearson international airport in Toronto, Ontario, Canada June 13, 2018. REUTERS/Chris Helgren/File Photo

 

NEW YORK (Reuters) - Concerns about Britain's plan to leave the euro zone sent the pound to an 11-month low against the greenback on Monday, while U.S.-China trade tensions helped boost the U.S. currency.

 

Comments by officials about a no-deal Brexit stoked fears Britain would crash out of the European Union without securing a trade agreement.

 

“Some of the political noise we’re been receiving across the pond reintroduced the Brexit discount into sterling,” said Mazen Issa, senior FX strategist at TD Securities in New York.

 

The pound <GBP=> fell as low as $1.2917 before retracing to $1.2940, down 0.50 percent on the day.

 

Worries that Italy will ramp up spending and challenge European Union budget rules, and a drop in German industrial orders in June, also weighed on the euro.

 

The euro zone single currency <EUR=EBS> fell to a five-week low of $1.1527 before rising back to $1.1552, down 0.13 percent.

Technical support around $1.15 may prop up the euro in coming days.

 

“I think a move below that would require a fresh catalyst,” said Issa.

 

The dollar, meanwhile, was boosted by trade war rhetoric.

 

China proposed retaliatory tariffs on $60 billion worth of U.S. goods ranging from liquefied natural gas to some aircraft on Friday, as a senior Chinese diplomat cast doubt on prospects of talks with Washington to solve their bitter trade conflict.

 

Some analysts see trade tensions as beneficial for the U.S. dollar as the economy is better placed to handle protectionism than emerging markets, and as tariffs may narrow the U.S. trade deficit.

 

“Trade tensions are very much dollar positive so I suspect that’s contributing to the dollar gains today,” said Erik Nelson, a currency strategist at Wells Fargo in New York.

 

Chinese stocks <.SSEC> fell 1.3 percent on Monday.

 

Since mid-April, the dollar index <.DXY> has gained 6 percent while an emerging-market local currency bond exchange traded fund <LEMB.K> has fallen more than 10 percent over the same period.

 

Against a broad basket of currencies <.DXY>, the dollar was last up 0.24 percent to 95.367. It is within striking distance of a more-than-one-year peak of 95.652 reached on July 19, which is also seen as having technical resistance.

 

The main U.S. economic focus this week will be Friday’s consumer price inflation report for July, which is expected to show a 0.2 percent increase in core inflation in the month, according to a Reuters poll.

 

(Additional reporting by Saikat Chatterjee in London; Editing by Nick Zieminski and James Dalgleish)

 

-- © Copyright Reuters 2018-08-07

[webfact]

Pound frail on Brexit fears, dollar steady

By Daniel Leussink

 

A shop assistant counts piles of British Pound Sterling banknotes at an Apple store in London, Britain November 18, 2017. REUTERS/Russell Boyce

 

TOKYO (Reuters) - The pound remained weak on Tuesday after dropping to an 11-month low against the dollar overnight on worries over a 'hard' Brexit from the European Union, while simmering U.S.-China trade tensions helped support the greenback.

 

Comments from officials about a no-deal Brexit stoked fears Britain would crash out of the EU next year without securing a trade agreement.

 

Sterling <GBP=D3> sank as far as $1.2920 overnight, its lowest since early-September last year, before making up some losses. It last stood at $1.2946.

 

The dollar index <.DXY> against a broad basket of currencies traded at 95.345 on Tuesday, not far from a more-than-one-year high of 95.652 reached on July 19.

 

Some analysts see trade tensions supporting the U.S. dollar as the nation's economy is better placed to handle protectionism than emerging markets, and as tariffs may narrow the U.S. trade deficit.

 

"There is still a lot of uncertainty on the tariffs. We don't know exactly how much will be implemented and how bad it can get," said Shinichiro Kadota, senior FX and rates strategist at Barclays in Tokyo.

 

"If U.S. economic growth starts to slow down because of tariffs or because past tax-cut effects are waning, then I think the economic performance could fade, which could also lead to fading dollar strength."

 

The euro stayed fragile after dipping to a five-week low of $1.1530 <EUR=> overnight, as German industrial orders fell more than expected in June, posting their steepest monthly drop in well over a year. It last traded a touch higher at $1.1558.

 

The dollar edged down 0.1 percent to 111.30 yen <JPY=> after ticking up slightly overnight.

 

The Turkish lira firmed against the dollar after broadcaster CNN Turk, citing diplomatic sources, reported that a delegation of Turkish officials will head to Washington in two days to discuss an ongoing row between the two NATO allies.

 

The currency <TRYTOM=D3> was trading at 5.2630 against the dollar at 0015 GMT on Tuesday.

 

It had plunged about 5.5 percent to a record low of 5.4250 overnight after the Trump administration announced late on Friday that it was reviewing Turkey's duty-free access to U.S. markets.

 

(Editing by Joseph Radford)

 

-- © Copyright Reuters 2018-08-07

[Chomper Higgot]

Oops!

[lovelomsak]

Some analysts see trade tensions as beneficial for the U.S. dollar as the economy is better placed to handle protectionism than emerging markets, and as tariffs may narrow the U.S. trade deficit.

 

“Trade tensions are very much dollar positive so I suspect that’s contributing to the dollar gains today,” said Erik Nelson, a currency strategist at Wells Fargo in New York.

  When the Us dollar is strong our Canadian dollar follows.  Today is over 25 baht has not been there for a while. Go Don Go. 

  Ratchet up the pressure.

[lanista]

The UK has been described as the 'appendix' of Europe.  Cut off the appendix ( brexit)  the body continues to live  and thrive but the small discarded appendage whittles and dies.

[champers]

3 minutes ago, lanista said:

The UK has been described as the 'appendix' of Europe.  Cut off the appendix ( brexit)  the body continues to live  and thrive but the small discarded appendage whittles and dies.

Rubbish. The UK is a huge market for European manufacturers. No deal serves no useful purpose to the UK or EU member coumtries.

[sammieuk1]

Hope the flat cap Brexit voters are all off to Benidorm for their hols a pound shrinking lesson awaits but wait the millionaires that led them to the promised land of own borders laws and no immigrants are doing very nicely Rule Britannia and the sunken pound??   

[BritManToo]

3 hours ago, lanista said:

The UK has been described as the 'appendix' of Europe.  Cut off the appendix ( brexit)  the body continues to live  and thrive but the small discarded appendage whittles and dies.

I think if the UK escapes there will be further 'amputations'.

The only thing driving the pound down is 'Project Fear'.

Edited August 7, 2018 by BritManToo

[StreetCowboy]

54 minutes ago, BritManToo said:

I think if the UK escapes there will be further 'amputations'.

The only thing driving the pound down is 'Project Fear'.

Most city markets are easily swayed by a bit of scare-mongering, and they know less than you or I about the true risks of Brexit.  That is why we are so wealthy.

 

At least the lower pound will be discouraging migrant workers.  Great news, if you want to work as unskilled agricultural or domestic labour. 

[korkenzieher]

For all the Brit bashers, has it not become obvious yet, that the fall in the pound has happened since the Chequers document went public? In other words Markets are fearful of a *compromise* solution - rather than a clean break and a free trade pact with the US and WTO rules elsewhere. When DT mentioned the pact, the pound and UK markets surged.

[SheungWan]

17 minutes ago, korkenzieher said:

For all the Brit bashers, has it not become obvious yet, that the fall in the pound has happened since the Chequers document went public? In other words Markets are fearful of a *compromise* solution - rather than a clean break and a free trade pact with the US and WTO rules elsewhere. When DT mentioned the pact, the pound and UK markets surged.

Yes, well, good luck with that balderdash.

[kannot]

5 hours ago, lanista said:

The UK has been described as the 'appendix' of Europe.  Cut off the appendix ( brexit)  the body continues to live  and thrive but the small discarded appendage whittles and dies.

really? gdp at 2.6  trillion $ at 2016 i think only Germany beats that?

[korkenzieher]

30 minutes ago, SheungWan said:

Yes, well, good luck with that balderdash.

Try some logic next time, otherwise I won't even bother to read your tripe.

[Chomper Higgot]

23 minutes ago, korkenzieher said:

Try some logic next time, otherwise I won't even bother to read your tripe.

Here’s some logic.

 

A no deal Brexit will make the UK the only nation in the world that has no trade deals in place.

[iroc4life]

All gloom and doom from you guys, Do the English and Scottish not have any pride or hope in their countries? Is Britain really that beholden to what the EU wants that it will die if they exit?? <deleted> happened to the Great Britain of yesterdays???? I believe it is all speculation and Britain will come out stronger than before afterwards, yes, there will be some pain in the beginning but the EU will not recover when others see and want to leave as well. Thats why the EU is trying to make it so hard for them to exit... 

[jesimps]

3 hours ago, BritManToo said:

I think if the UK escapes there will be further 'amputations'.

The only thing driving the pound down is 'Project Fear'.

Project fear in the shape of Carney, who immediately after increasing interest rates wenton radio and did a hatchet job on it. The man should wear a "Danger" sign around his neck.

[baansgr]

CPI for September will be interesting when benefits etc receive increases. Possibly another  rate rise sooner than one expects. 

[dunroaming]

4 hours ago, korkenzieher said:

For all the Brit bashers, has it not become obvious yet, that the fall in the pound has happened since the Chequers document went public? In other words Markets are fearful of a *compromise* solution - rather than a clean break and a free trade pact with the US and WTO rules elsewhere. When DT mentioned the pact, the pound and UK markets surged.

The fall in the pound started when people voted to leave the EU.  The continued nervousness is because Britain cannot find a way forward and the threat of a no deal Brexit looms.

[baansgr]

2 hours ago, jesimps said:

Project fear in the shape of Carney, who immediately after increasing interest rates wenton radio and did a hatchet job on it. The man should wear a "Danger" sign around his neck.

yep carnage Carney they call him,  man needs shooting 

[Retiredandhappyhere]

9 hours ago, sammieuk1 said:

Hope the flat cap Brexit voters are all off to Benidorm for their hols a pound shrinking lesson awaits but wait the millionaires that led them to the promised land of own borders laws and no immigrants are doing very nicely Rule Britannia and the sunken pound??   

Wow, another arrogant and condescending poster who believes that only the 48% of British voters who voted to remain in the EU  have any brains.  You can disparage the other 52% as much as you like, but a compromise deal WILL be reached at the eleventh hour with the EU and the UK will continue to be a trading force in the world just as it is now.  The UK has overcome far bigger problems than Brexit in the past.

[Retiredandhappyhere]

10 hours ago, champers said:

 

 

 Lanista said:

The UK has been described as the 'appendix' of Europe.  Cut off the appendix ( brexit)  the body continues to live  and thrive but the small discarded appendage whittles and dies.

 

10 hours ago, champers said:

 

Rubbish. The UK is a huge market for European manufacturers. No deal serves no useful purpose to the UK or EU member countries.

 

Yes, and the UK was once described as "the sick man of Europe" but recovered from that sickness just as it will recover from Lanista's  hypothetical appendicitis.

[sammieuk1]

1 hour ago, Retiredandhappyhere said:

Wow, another arrogant and condescending poster who believes that only the 48% of British voters who voted to remain in the EU  have any brains.  You can disparage the other 52% as much as you like, but a compromise deal WILL be reached at the eleventh hour with the EU and the UK will continue to be a trading force in the world just as it is now.  The UK has overcome far bigger problems than Brexit in the past.

A poster with an opinion that differs from yours is arrogant and condescending what a joker. with his stale worn out 52% stat like some trophy its all asperations and pipe dreams you are following. keep England for the English while we go and populate where ever we like because we are English hypocrite. ?

[Proboscis]

11 hours ago, champers said:

Rubbish. The UK is a huge market for European manufacturers. No deal serves no useful purpose to the UK or EU member coumtries.

You obviously have not heard of the game theory experiment known as "the prisoners' dilemma." look it up as it captures an aspect of the issue at stake.

 

Just as only about 30% of the USA adult population form Trump's base and now get to steer foreign and domestic policy, so too in the UK are the hard brexiteers, those who would prefer no deal brexit, now probably form less than 30% of the vote (many of those who make up the other 25% of the 55% who vited brexit in the referendum were in favor of a lighter version of brexit or wanted to shake things up or just wanted to punish the government for austerity). The same kind of thing goes for the populations in the EU - less than 30% made up of some very anti-EU people along with some far left or far right in favour of just kicking the UK out with no deal and then there is everyone else who is kinda confused. 

 

But the trouble is that it is very hard to unite remainers, light brexiteers and don't knows into a coherent voting mass or even into a unified voice loud enough to frighten politicians (EU and UK politicians) into doing the right thing and hammering out a deal. So, just as in the USA many of the tarrifs brought in by Trump are against the economic interests of the Americans, so too there would be a no-deal resolution to brexit which will be terrible for the economies of both the EU and UK. But tell that to the politicians who insist that their voters are telling them that brexits means hard as nails brexit. They don't care.

[watcharacters]

 

Good time to buy GBPs?

 

[beautifulthailand99]

7 hours ago, Chomper Higgot said:

Here’s some logic.

 

A no deal Brexit will make the UK the only nation in the world that has no trade deals in place.

Well worth a listen from folk who do business rather than crass sloganeering - far past caring now all those working class folk cheering on Boris / Rees-Mogg and the other toffs screwing the country and enriching themselves on the back of Brexit chaos will get their just desserts. Starting with expats and the pound. 

 

 

 

[TommyUK1960]

Considering the establishment wanted a remain vote and lost, they put remainer Theresa May in to deliver a Brexit in name but as much as possible to keep us tide up with the corrupt EU. The people of control being the House of Lords and many politicians will make sure a deal is done. So my money is on a deal being achieved and the pound bouncing back. I personally would like to see us leave with no deal.

[SheungWan]

2 hours ago, watcharacters said:

Good time to buy GBPs?

Not right now IMHO.

[beautifulthailand99]

15 hours ago, sammieuk1 said:

Hope the flat cap Brexit voters are all off to Benidorm for their hols a pound shrinking lesson awaits but wait the millionaires that led them to the promised land of own borders laws and no immigrants are doing very nicely Rule Britannia and the sunken pound??   

To all my working class friends thank you it has been a privilege conning you down the garden path - now go back to your hovels and dream of illusory freedoms  that you will never have. I have 2  recently re-located  Dublin Hedge funds to take care of whilst I loot the UK. Jacob Rees-Mogg's the name and I champion the hard working British man....don't worry it should all come right in say 50 years or so .....oh and btw do you really need all of that pension - times are hard you know. Sacrifices and all that ......

 

 

 

 

 

Edited August 7, 2018 by beautifulthailand99

[BritManToo]

17 hours ago, dunroaming said:

The fall in the pound started when people voted to leave the EU.  The continued nervousness is because Britain cannot find a way forward and the threat of a no deal Brexit looms.

The fall of the pound isn't across all countries.

Vietnam and Philippines exchange rates are nearly the same now as they were before.

Thai Baht is very strong, and all western countries are worse off since the Brexit vote, I surprised some remainers aren't claiming the Brexit vote is threatening the whole civilized western world.

[Laughing Gravy]

13 hours ago, beautifulthailand99 said:

Well worth a listen from folk who do business rather than crass sloganeering - far past caring now all those working class folk cheering on Boris / Rees-Mogg and the other toffs screwing the country and enriching themselves on the back of Brexit chaos will get their just desserts. Starting with expats and the pound. 

 

 

 

3 remainers. with project fear talking crap who are doomsday preppers. Thankfully people can see through the smell. The government stock piling food and water. Fake news at its worst.