The pound reaches lowest level since July
09 September

The pound reaches lowest level since July

Sterling was unable to shake pressure as fears grow that Britain is preparing to undercut its Brexit divorce treaty. It dipped 0.2% to a six-week low of $1.2943, its lowest since the end of July. The British pound also fell to a six-week low of 90.97 pence against the euro and 137.10 yen. Britain will set out its blueprint for life outside the European Union today, publishing legislation which a minister acknowledged in the House of Commons that it would break international law in a “limited way”.


The US dollar found support as a stock market slide spooked investors into selling riskier currencies. The safe-haven yen climbed to a one-week high of 105.83 per dollar. Risk-sensitive Antipodean currencies crept from two-week lows leaving the Aussie ahead 0.2% at $0.7229 and the kiwi steady at $0.6634. An overnight slump in the oil price dragged down oil exporters' currencies. The Norwegian krona extended an overnight fall to hit a more than six-week low of 9.1256 per dollar. The Canadian dollar dropped to a three-week low but then steadied ahead of a Bank of Canada policy decision. Investors expect no changes to interest rates and will focus on the tone around the outlook. In exotics, the Turkish lira fell to a record low yesterday and is now testing the 7.5 mark.


The euro was steady after seven declining sessions ahead of tomorrow’s European Central Bank meeting trepidation. The common currency has lost about 2% since posting a 28-month high above $1.20 on Sept. 1, pulled by comments from ECB chief economist Philip Lane, who said the exchange rate mattered to monetary policy. Any hint of concern at the currency’s rise, or that low inflation will require ultra-easy policy for a very long time could send the euro lower again and boost the dollar. The euro is buying $1.1773 and is testing a strong support at 124.41 against the yen.


Northern Ireland minister Brandon Lewis conceded yesterday that the UK government will break international law, in a bill to be published today, by attempting to re-write the Brexit divorce deal that the prime minister signed with the EU less than a year ago. The bloc’s Brexit negotiators, who are in London for another difficult round of talks have warned Britain that if it reneges on the divorce deal there would be no agreement. Britain and the EU say they have until October 15. to agree on a free trade deal, which would ease the worries of some companies who fear disruption at the borders and of supply chains at a time when many are struggling with the coronavirus crisis.



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