Pound near 20-month low on Brexit setback, dollar steadies after surge

By Shinichi Saoshiro

 

FILE PHOTO: British Pound Sterling and U.S. Dollar notes are seen in this June 22, 2017 illustration photo. REUTERS/Thomas White/Illustration

 

TOKYO (Reuters) - The pound languished near 20-month lows against the dollar on Tuesday after British Prime Minister Theresa May postponed a crucial vote on her Brexit deal, raising the risk of a chaotic exit from the European Union.

 

May on Monday postponed a parliamentary vote, which was due to take place on Tuesday, on her Brexit deal to seek more concessions. The move stoked more uncertainty as Britain now faces Brexit without a deal, a last-minute agreement or another EU referendum.

 

Sterling crawled up 0.1 percent to $1.2574 (0.9879 pounds) <GBP=D4> after slumping 1.3 percent the previous day, when the currency brushed $1.2507, its lowest since April 2017.

 

The pound's slide was a boon for the dollar, which rallied back from a 2-1/2-week low against a basket of currencies initially driven by a growing view the Federal Reserve could pause its rate hike cycle sooner than previously thought.

 

The dollar index, a measure of the greenback's strength versus a group of six major peers, was a touch lower at 97.092 <.DXY> after rallying 0.75 percent on Monday. At one stage in overnight trade it had fallen to 96.364, its lowest since Nov. 22.

 

"Falling U.S. yields will eventually nudge the dollar into a downtrend, but probably not at this moment," said Junichi Ishikawa, senior FX strategist at IG Securities in Tokyo.

 

"There just isn't enough demand for the yen, which is less of a safe haven, and the euro, with the political concerns in Europe. And there is of course the pound which is burdened with Brexit problems."

 

The 10-year Treasury note yield <US10YT=RR> has dropped to a three-month low this week, with dovish comments from Fed officials and soft U.S. data further sharpening views on an imminent pause in the tightening cycle.

 

The euro nudged up to $1.1365 <EUR=> after shedding 0.2 percent on Monday.

 

The common currency did gain against the struggling pound, although concerns over violent protests in France against President Emmanuel Macron's economic reform limited its gains.

 

The dollar dipped 0.25 percent to 113.02 yen <JPY=> after advancing 0.5 percent overnight.

 

"It is difficult to draw a very bearish scenario for the dollar as talk of the U.S. economy slipping into recession and the Fed switching to monetary easing from tightening seems too far fetched at this point," said Koji Fukaya, president at FPG Securities in Tokyo.

 

"Whenever there is a global risk-off event, the dollar will find demand - as long as the risk aversion does not originate in the United States."

 

The Indian rupee was jolted after Reserve Bank of India Governor, Urjit Patel, resigned abruptly on Monday after a months-long tussle over policy with the government that has raised concerns about the bank's independence.

 

Indian rupee forwards <INRNDFOR=> fell more than 1 percent on Monday, posting their biggest daily slump in more than five years.

The Australian dollar rose 0.1 percent to $0.7197 <AUD=D4> after slipping on Monday to a one-month low of $0.7170.

 

(Editing by Shri Navaratnam)

 

-- © Copyright Reuters 2018-12-11

Wait and see what happens when they do leave,i predict it will go below 40 baht.

Sure then those Brexiteers will have a brainwave, we can transfer to the Euro...

It will go below 40.

At least it will be good for British exports. Oh wait....

40 minutes ago, marko kok prong said:

Wait and see what happens when they do leave,i predict it will go below 40 baht.

It might but briefly.

It all depends on how the politicians carry themselves .With divided house and impaired vision indeed the £ can nosedive. 

If the house unite "unlikely" we can have a different scenario but economic factors will determine the fate of the £.

38 minutes ago, Cryingdick said:

At least it will be good for British exports. Oh wait....

Not that good when you factor in the cost of shipping to our new customers far far away...

Thank goodness for the turnips.

 

 

At least there’ll be something to eat.

2 minutes ago, Chomper Higgot said:

Thank goodness for the turnips.

 

 

At least there’ll be something to eat.

Cunning plan , Baldrick!

3 hours ago, marko kok prong said:

Wait and see what happens when they do leave,i predict it will go below 40 baht.

Unlikely we'll leave. Meanwhile T May plays kamikaze politics with our economy. Unforgiveable.

3 hours ago, mickymouse1 said:

It might but briefly.

It all depends on how the politicians carry themselves .With divided house and impaired vision indeed the £ can nosedive. 

If the house unite "unlikely" we can have a different scenario but economic factors will determine the fate of the £.

Don't believe it, for the past couple of years the value of the pound has been all about Brexit and no doubt this will continue as the chaos mounts.

God help us if labour get in ,Abbott said it would be thirty twelve, or even sixty fifteen if we are lucky.

 

Sent from my SM-A720F using Thailand Forum - Thaivisa mobile app

 

 

 

 

The pound will rebound rapidly once this tortuous process is completed.

5 minutes ago, Thingamabob said:

The pound will rebound rapidly once this tortuous process is completed.

And Father Christmas is real.

It is not certain at all that the UK will leave. The shadowy powers behind the NWO (Bilderberg Group types or the EU etc.), that are pulling strings, may yet somehow orchestrate a way for the UK to stay in or just go back to as it was with the help of the remainers in the UK. I don't see how leaving is going to happen as the establishment doesn't want it even if the public voted for it.

A Labour government under those currently in charge of that party would be a disaster for the UK, but Corbyn and crew want out too as they will find it very hard to realise their re-nationalization dreams for public services if still in the EU as there are many EU regulations/laws/obstacles in their way specifically designed to make this sort of thing as hard as possible for member states.

As for the pound, it's all about uncertainty. Whichever way you shake it on leave or not, then the pound will go up once these b(w)ankers know what the deal is and where they stand. It might go down further initially (on a leave eventuality) but once the government pulls its finger out then it'll start to normalize whatever it decides.

Little taster on what will happen to the British economy when it really leaves the EU. Zimbabwean dollars will have more worth at this rate.

4 hours ago, Basil B said:

Not that good when you factor in the cost of shipping to our new customers far far away...

Strangely enough,

Shipping charges between China and the UK are about half the price of shipping between Germany and the UK.

5 hours ago, marko kok prong said:

Wait and see what happens when they do leave,i predict it will go below 40 baht.

Depends on the circumstances , a May style deal will see Sterling appreciate considerably , no deal and it will crash and burn.

And Father Christmas is real.

I knew it,people keep saying he isnt ,but he is ,you wait.

Sent from my SM-A720F using Thailand Forum - Thaivisa mobile app

5 hours ago, mickymouse1 said:

It might but briefly.

It all depends on how the politicians carry themselves .With divided house and impaired vision indeed the £ can nosedive. 

If the house unite "unlikely" we can have a different scenario but economic factors will determine the fate of the £.

Depends how you define briefly , a no deal scenario will certainly see Sterling struggling for a number of years.

2 hours ago, flossie35 said:

Unlikely we'll leave. Meanwhile T May plays kamikaze politics with our economy. Unforgiveable.

Actually the opposite !

Regardless of ones views on Brexit , in the short term ( say next 5 years ) there is almost universal acceptance that in economic terms (GDP / Sterling stength ) the ideal scenario would be ;

1) Remain.

2) Leave with May style agreement.

3) Leave with no deal

The last option would be shattering for the economy and is precisely what Mrs May is fighting to avoid.

5 hours ago, Chomper Higgot said:

Thank goodness for the turnips.

 

 

At least there’ll be something to eat.

Yes, and boiled spuds & boiled cabbage just like mother used to do. None of this olive oil nonsense - just another EU conspiracy!

55 minutes ago, Thingamabob said:

The pound will rebound rapidly once this tortuous process is completed.

Depends !

If you all know how the pound is going to move, why aren't you all multi-millionaires?

It surely is only a brief correction. I mean, how could the world not have full confidence in the British parliament:

 

https://www.theguardian.com/politics/2018/dec/10/day-of-brexit-drama-ends-with-mp-grabbing-the-ceremonial-mace

 

Strong and stable - stable (augean, most likely) being the key word.

4 minutes ago, BritManToo said:

If you all know how the pound is going to move, why aren't you all multi-millionaires?

Too busy investing in new armchairs to pontificate from!

26 minutes ago, BritManToo said:

If you all know how the pound is going to move, why aren't you all multi-millionaires?

Perhaps some of us are.

2 minutes ago, Chomper Higgot said:

Perhaps some of us are.

But clearly not you.

7 hours ago, marko kok prong said:

Wait and see what happens when they do leave,i predict it will go below 40 baht.

It will be good for Americans to holiday in Britain next Summer. 

3 hours ago, Thingamabob said:

The pound will rebound rapidly once this tortuous process is completed.

yeah, perhaps,maybe, in 20 years time when Brexit is over.