Sterling suffers from reemerging Brexit issues, sets to close weekly session in woe
SYDNEY-Sterling hit worst week in more than two years on Friday brought heavily by resurfacing concerns about Britain’s departure from the European Union, while positive records revived dollar from its previous loss.
Overnight, pound GBP= declined further and was quoted $1.30 for the first time in two weeks. It traded $1.3008 in Asian trading hours as concerns about whether a deal will be forwarded before December 2020 dampened market optimism.
Cable shed all raked earnings after Prime Minister Boris Johnson was re-elected last week as it sunk 2.4% against greenback since the start of the week. Below average records of sterling were tallied against euro and is posed for its worst weekly defeat in more than three years if decline continues.
“The market was always a little bit naive in a way to think that a Tory election win was going to remove the fog of Brexit,” said Ray Attrill, head of FX strategy at National Australia Bank. “There were obviously some longs in weak hands that got forced out,” he added.
For almost four years since Britain decided to depart from European Union, Johnson’s administration is now set to exit the political union at latter part of January as he brought out Dec. 2020 as deadline for a trade pact.
Ambiguity pulled safe-haven Swiss franc to ceiling-level of 1.0081 against euro, and is considered the strongest record against greenback since September.
Across the globe, dollar is steady at 97.404. Such activity was mainly from solid housing and better-than-expected manufacturing records that curbed two weeks’ worth of losses against other currencies. In line, expectations were low that US Federal Reserve will move its interest rates anywhere in January.
The dollar rose above Japanese yen at 109.37 per yen and performed marginally weaker against euro at $1.1124. The greenback acquired 0.7% on the yen this week.
The top advancer was the Australian dollar AUD=D3 which soared from strong jobs record that rallied traders to trim out investments on interest rate reduction when central bank hits February 2020. Moreover, expectations that the Reserve Bank of Australia will cut rates lost an estimated 60%.
“That’s a notable change. When you drop under 50% the psychology changes a little bit,” said Westpac FX analyst Sean Callow. “I can see why people are not quite convinced,” said Callow, who is sticking with a forecast for a cut,” he added.