Pound Slides As U.K. Parliament Opens Door For Brexit Talks
14 März 2017 - 4:46AM
RTTF2
The pound declined against its major counterparts in the Asian
session on Tuesday, as the U.K. Parliament cleared the Brexit bill
to let the U.K. Prime Minister Theresa May to begin formal
withdrawal process by the March-end deadline.
The Commons earlier voted overwhelmingly to overturn two
previous Lords amendments, permitting the Parliament to grant a
"meaningful vote" on terms of final Brexit deal and guaranteeing
the rights of EU nationals living in the UK. This follows the House
of Lords approval to resist these amendments by a majority vote,
mainly because Labor peers decided to abstain.
The bill when signed by the Queen would become law, clearing way
for May to launch Article 50 talks on leaving the EU by the end of
March.
In economic front, the British Chambers of Commerce upgraded the
UK growth outlook for this year citing an upward revision to UK GDP
growth data in the final quarter of 2016, and stronger than
expected levels of consumer spending.
Gross domestic product was forecast to expand 1.4 percent
instead of 1.1 percent this year. Growth of 0.4 percent was
expected in the first quarter of 2017.
Meanwhile, Asian stock markets are trading mixed, following the
lackluster cues overnight from Wall Street and on caution as the
U.S. Federal Reserve kicks off its two-day monetary policy meeting
later in the day. Investors are also awaiting industrial output and
retail sales data from China today.
The Fed is widely expected to increase interest rates at the
culmination for its two-day meeting on Wednesday. Investors will
also focus on Fed Chair Janet Yellen's accompanying press
conference for clues about whether rates will be hiked again in the
coming months.
The pound climbed on Monday after Scotland's First Minister
Nicola Sturgeon announced plan for a second independence referendum
within two years. It rose 0.4 percent against the greenback, 0.6
percent against the yen, 0.6 percent against the euro and 0.2
percent against the Swiss franc for the day.
The pound dropped to 1.2239 against the Swiss franc, its lowest
since January 17. On the downside, 1.18 is possibly seen as the
next support level for the pound.
The pound slipped to near a 2-month low of 1.2124 against the
dollar, compared to Monday's closing value of 1.2217. If the
pound-dollar pair extends decline, it may challenge support around
the 1.20 region.
Reversing from an early high of 0.8713 against the euro, the
pound weakened to 0.8773. Continuation of the pound's downtrend may
see it challenging support around the 0.89 level.
The pound, having advanced to 140.42 against the Japanese yen at
6:30 pm ET, reversed direction and fell to 139.55. The pound is
poised to find support around the 138.00 area.
Looking ahead, Eurozone industrial production for January and
German ZEW economic sentiment index for March are due to be
released in the European session.
In the New York session, U.S. NFIB small business index and U.S.
PPI, both for February, are slated for release.
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