British Pound Reached 1-Year Low on No-Deal Brexit Worries
Australian dollar is trading as the second weakest major currency, next to the pound. Japanese yen is trading as the strongest one, followed by US dollar which usually benefits from trade war. Euro pares some of this week’s gain but remains resilient.
The British pound fell below $1.29 level for the first time in almost a year, as a result of a sell-off caused by fears of investors that the UK will withdraw from the EU without a trade deal. Sterling declined after British Foreign Secretary Liam Fox announced over the weekend that Brexit's risk of inaction had increased to 60%.
British Prime Minister Theresa May will discuss Brexit with 27 other EU leaders at an informal summit in Austria next month and again meet with EU leaders in October to try to complete the deals on the terms of Britain's withdrawal from the EU.
In its monthly economic bulletin, the European Central Bank suggested that the Eurozone private sector consumption has further room for growth. According to the ECB, private consumption has been the main driver of the recent economic expansion, but there is still scope for further growth. Also, the ECB argued that recovery in private consumption has so far been weak, particularly for lower income families, whose consumption levels have yet to recover to their pre-crisis level.
Today’s Chinese trade data were optimistic. China's exports rose 12.2% yoy in July, up from 11.2% gain in June and beating forecasts for a 10% growth. Imports grew 27.3% in July, exceeding forecast of 16.2% growth, and compared with a 14.1% rise in June. China's trade surplus with the United States fell slightly to $28.09 billion last month from a record $28.97 billion in June. Economists had forecast the surplus would be $39.33 billion in July, compared to a surplus of $41.47 billion in June.
The US Trade Representative (USTR) plans to move forward with further tariffs for Chinese imports, starting August 23. A 25% tariff will apply for the annual import of Chinese goods worth about $16 billion, covering about 280 items of goods.