Pound Up As EU Court Aide Says UK Can Unilaterally Revoke Article 50, PMI Rises
December 04 2018 - 1:22AM
RTTF2
The pound drifted higher against its key counterparts in the
European session on Tuesday, after a senior EU law officer said the
U.K. could halt Brexit by unilaterally revoking Article 50 and as a
data showed that U.K. construction activity expanded at the fastest
pace in four months in November.
Survey data from IHS Markit showed that U.K. construction PMI
rose in November to the highest since July.
The construction Purchasing Managers' Index climbed to 53.4 from
53.2 in October. Economists had forecast a score of 52.5.
A leading European legal official said that the U.K. can still
halt Brexit by revoking Article 50 without the consent of other EU
member states.
The advocate general said Article 50 of the Libson Treaty allows
the "unilateral revocation of the notification of the intention to
withdraw from the European Union, until such time as the Withdrawal
Agreement is formally concluded."
The Bank of England governor Mark Carney suggested that the
probability of the occurrence of a disorderly Brexit is very
low.
"Tail risk is tail risk, it's low probability. And MPs on the
committee probably have a better idea about how Brexit will play
out," Carney told Treasury Committee.
The pound declined against its most major counterparts in the
Asian session amid rising risk aversion, as the initial euphoria
over the U.S.-China truce on import tariffs subsided and investors
wondered if a 90-day tariff truce was enough for the two countries
to resolve their differences on a range of issues.
The pound added 0.9 percent to hit a 5-day high of 1.2840
against the dollar, from a low of 1.2720 hit at 7:45 pm ET. The
pair was valued at 1.2723 when it closed deals on Monday.
Continuation of the pound's uptrend may take it to a resistance
around the 1.30 level.
Having fallen to near a 5-week low of 143.93 against the yen at
3:00 am ET, the pound reversed direction and bounced off to 144.76.
At yesterday's close, the pair was worth 144.59. Next key
resistance for the pound is seen around the 147.00 region.
Data from the Bank of Japan showed that Japan monetary base rose
6.1 percent on year in November, coming in at 501.330 trillion yen.
That follows two straight months of 5.9 percent gains.
Following more than a 2-month low of 1.2673 hit at 3:00 am ET,
the pound moved up to 1.2757 against the franc. The pound-franc
pair finished Monday's trading at 1.2693. The pound is seen finding
resistance around the 1.29 mark.
Figures from the Federal Statistical Office showed that
Switzerland's consumer price inflation slowed more-than-expected in
November to its weakest level in seven months.
The consumer price index rose 0.9 percent year-on-year following
a 1.1 percent increase in October. Economists had forecast 1
percent inflation.
The pound was trading higher at 0.8895 against the euro, up from
a 2-1/2-month low of 0.8945 seen at 3:00 am ET. The pair closed
yesterday's deals at 0.8921. The U.K. currency is poised to
challenge resistance around the 0.86 mark.
Figures from Eurostat showed that Eurozone producer price
inflation accelerated further in October, defying expectations.
Producer prices rose 4.9 percent year-on-year after a revised
4.6 percent in September. Economists had expected the rate to
remain unchanged at September's original figure of 4.5 percent.
Looking ahead, at 10:00 am ET, Federal Reserve Bank of New York
President John Williams will give a press conference about local
employment and labor force trends at the Federal Reserve Bank of
New York.
Bank of England member Gertjan Vlieghe will speak at the
Plymouth Manufacturing Group Annual Christmas Lecture in England at
1:00 pm ET.
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