Pound Weakens As Brexit Talks Close To Collapse
October 08 2019 - 3:21AM
RTTF2
The pound drifted lower against its major counterparts in the
European session on Tuesday, after comments from a source in Prime
Minister Boris Johnson's office suggested that a Brexit deal was
"overwhelmingly unlikely" and the talks with the EU would "probably
end this week."
The source said German Chancellor Angela Merkel has told the PM
that a deal is impossible unless Northern Ireland remain in the
European Union's customs union.
Labour blamed No 10 of trying to sabotage the Brexit talks.
If the talks break down, the government will not negotiate
further as any delay would be totally pointless, the source
said.
Shadow Brexit secretary Keir Starmer called on Parliament to
"unite prevent this reckless government crashing us out of the
EU".
The latest developments reinforced the possibility for a no-deal
Brexit on October 31.
The currency held steady against its major counterparts in the
Asian session, excepting the yen.
The pound touched the key 0.9000 mark against the euro, which
was its lowest level since September 9. The currency may face
support around the 0.92 level.
Figures from the Federal Statistical Office showed that
Germany's industrial production rose unexpectedly in August, after
a slump in July.
Production grew 0.3 percent month-on-month in August, defying
expectations for a 0.2 percent fall.
The pound depreciated to a weekly low of 1.2209 against the
greenback, from a high of 1.2302 hit at 2:30 am ET. Next near term
support for the pound is likely seen around the 1.21 level.
The U.K. currency fell to near a 5-week low of 130.45 against
the yen from yesterday's closing value of 131.81. On the downside,
127.00 is likely seen as the next support level for the pound.
Data from the Ministry of Communications and Internal Affairs
showed that Japan household spending rose 1.0 percent on year in
August - coming in at 296,327 yen.
That was in line with expectations and up from 0.8 percent in
July.
The pound weakened to 1.2098 versus the franc, a level unseen
since September 5. The currency is likely to challenge support
around the 1.19 mark, if it weakens further.
Looking ahead, at 8:15 am ET, Canada housing starts for
September are due.
Canada building permits for August and U.S. producer prices for
September are scheduled for release in the New York session.
Federal Reserve Bank of Chicago President Charles Evans will
deliver a speech at the Chicago Rotary Club Luncheon at 1:35 pm
ET.
At 1:50 pm ET, Federal Reserve Chair Jerome Powell is set to
give a speech titled "Data Dependence in an Evolving Economy" at
the 61st Annual Meeting of the National Association of Business
Economics in Denver.
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