Pound Weakens On U.K. Political Worries
06 Oktober 2017 - 10:13AM
RTTF2
The pound dropped against its major rivals in the European
session on Friday, weighed by worries over the future of U.K. Prime
Minister Theresa May amid divisions within Conservative party
demanding her resignation.
Concerns emerged after former party chairman Grant Shapps
demanded a leadership contest following May's closing speech at the
Conservative party conference on Wednesday.
Shapps said he had the backing of about 30 MPs, including five
former cabinet minister.
"I think she should call a leadership election," Shapps told BBC
Radio 5 live.
In order to trigger a vote of confidence, 48 MPs should write to
the chairman of the party's so-called 1922 Committee.
Investors were also fretted over political risks in Spain.
Spanish banks came under selling pressure again after the
Catalan government said it would press ahead with its planned
parliament meeting on Monday to discuss Sunday's referendum result
and announce a unilateral declaration of independence in defiance
of a court ban.
Data from the mortgage lender Halifax and IHS Markit showed that
UK house prices increased at a faster pace in September.
House prices increased 4 percent year-on-year in three months to
September, faster than the 2.6 percent rise seen in three months to
August. This was the biggest annual growth since February and
exceeded the expected rate of 3.6 percent.
The currency has been trading in a negative territory in the
Asian session.
The pound declined to 0.8970 against the euro, its lowest since
September 14. If the pound falls further, 0.905 is possibly seen as
its next support level.
Data from Destatis showed that Germany's factory orders
rebounded at a faster than expected pace in August.
Factory orders grew 3.6 percent month-on-month in August,
reversing a revised 0.4 percent fall in July. Orders were forecast
to climb 0.7 percent.
The pound weakened to more than a 4-week low of 1.3052 against
the greenback, compared to 1.3119 hit late New York Thursday. On
the downside, 1.29 is likely seen as the next support level for the
pound.
The pound that closed Thursday's deals at 147.98 against the yen
slid to a 3-week low of 147.41. Further downtrend may take the
pound to a support around the 146.00 mark.
Preliminary data from the Cabinet Office showed that Japan's
leading index improved to the highest level seen since early 2014
in August.
The leading index, which measures the future economic activity,
rose to 106.8 in August from 105.2 in the previous month.
Reversing from an early high of 1.2837 against the Swiss franc,
the pound dropped to a new 3-week low of 1.2785. The pound is seen
finding support around the 1.26 area.
Looking ahead, U.S. and Canadian jobs data for September, U.S.
wholesale sales and consumer credit for August as well as Canada
Ivey PMI for September are set for release in the New York
session.
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