Pound Fell Under Pressure of Political Uncertainty
US dollar stays firm and extends post NFP gains. USD also remains the strongest one, supported by heightened trade tensions with China.
British pound is trading as the weakest one for today on worries on no-deal Brexit. The GBP/USD pair updated its lows of 2018, falling to the lowest level since September 5, 2017.
The drop in the pound came after Liam Fox (Britain’s international trade secretary) said in an interview that there was a 60:40 chance that the UK would leave the European Union without an agreement. The statement came after Mark Carney (Bank of England Governor) warned on Friday that there is an “uncomfortably high” risk of Britain exiting the EU with no deal.
Prime Minister Theresa May’s spokesman tried to calm the markets and said “We continue to believe that a deal is the most likely outcome because reaching a good deal is not only in the interests of the UK, it is in the interests of the EU and its 27 members.”
The euro fell on the back of news, that German factory orders slumped 4.0% in June compared to a smaller 0.4% decline expected. The slump in orders was driven by a drop from non-Eurozone countries and comes on the back of a rise of 2.6% in May. Meanwhile, German construction barely grew last month as July construction PMI printed 50.0 vs. 53.0 expected. The EUR/USD pair was trading around the 1-year low of 1.1530.
Eurozone Sentix Investor Confidence rose solidly to 14.7 in August, up from 12.1 and beat expectation of 12.8. Current situation index rose from 36.8 to 33. Expectations index also improved from -10.0 to -5.8. German Sentix Investor Confidence index rose from 16.2 to 20.4. Current situation index up from 51.3 to 54.8, expectations index up from -14.0 to -9.3.