Pound Extends Decline After U.K. Hardens Stance On Brexit Talks
May 22 2017 - 02:01AM
RTTF2
The pound extended decline against its major counterparts in
early European deals on Monday, after the U.K. threatened to leave
the currency bloc without a deal, unless Brussels drops its demand
for the payment of 100 billion euros as the "divorce bill."
In an interview with The Sunday Times, the Brexit Minister David
Davis reiterated the government's position to walk away from the
negotiations without any deal, rejecting the demand of EUR 100
billion in settlement for the U.K.'s exit from the European
Union.
"We don't need to just look like we can walk away, we need to be
able to walk away," Davis said.
His remarks came ahead of today's European Union ministers
meeting in Brussels, where the EU members discuss their position
for Brexit negotiations.
The currency was also weighed by the narrowing support for the
ruling party in opinion polls ahead of the election on June 8.
Opinion polls released by Yougov for the Sunday Times showed
that the gap between the Conservative and Labour opposition party
had dropped to 9 points, with a score of 44 to 35 percent of
votes.
With three weeks to go before the election, poor showing in the
polls for Conservative party made investors nervous over the
outcome of the election.
Data from the property website Rightmove showed that UK average
asking prices hit a new record level in May.
House prices climbed 1.2 percent month-on-month to a record GBP
317,281 in May. This was the fifth consecutive rise in house
prices.
The pound has been falling against its major rivals in the Asian
session.
The pound dropped to 144.13 against the yen, compared to 144.99
hit late New York Friday. The pound is likely to locate support
around the 143.00 zone.
Data from the Ministry of Finance showed that Japan recorded a
merchandise trade surplus of 481.7 billion yen in April.
That was shy of expectations for 520.7 billion yen, and it was
down from 614.7 billion yen in March.
The pound that closed yesterday's deals at 1.3033 against the
greenback reached as low as 1.2966. If the pound-greenback pair
extends slide, 1.28 is possibly seen as its next support level.
Retreating from an early high of 1.2683 against the Swiss franc,
the pound weakened to a 4-day low of 1.2632. Continuation of the
pound's downtrend may see it challenging support around the 1.25
mark.
Data from the Swiss National Bank showed that Switzerland's
money supply expanded at a steady pace in April.
M3 climbed 3 percent year-on-year in April, the same pace of
growth as seen in March. In February, M3 had expanded 3.2 percent,
which was the fastest since December 2014.
Although the pound dropped to near a 2-month low of 0.8624
against the euro, it rebounded in a short while and held steady
around 0.8613. The pair finished Friday's deals at 0.8598.
Looking ahead, at 10:00 am ET, Philadelphia Fed President
Patrick Harker speaks about the link between physical and economic
well being at the Jefferson College of Health Professionals, in
Philadelphia.
Minneapolis Fed President Neel Kashkari gives brief welcome
remarks before the first conference of the Opportunity and
Inclusive Growth Institute in Minneapolis at 10:30 am ET.
At 1:30 pm ET, the Reserve Bank of Australia Deputy Governor Guy
Debelle delivers a speech titled "How I Learned to Stop Worrying
and Love the Basis" at the Bank of International Symposium, in
Basel.
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