Pound Falls Amid Risk Aversion
27 July 2015 - 7:08PM
RTTF2
The British pound weakened against the other major currencies in
the early European session on Monday as European shares fell,
tracking the losses in the Asian session, due to weak economic data
from the China and as commodity prices retreated. Meanwhile,
investors are treading cautiously ahead of this week's meeting of
the U.S. Federal Reserve.
The U.K.'s FTSE 100 index is currently down 0.34 percent or
22.15 points at 6,557, France's CAC 40 index is down 1.51 percent
or 76.54 points at 4,980 and Germany's DAX is down 1.26 percent or
143.10 points at 11,204.
Few economists expect the Federal Reserve's two-day policy
meeting to result in a rate increase when it concludes Wednesday.
Nonetheless, investors wait to see whether Fed Chair Janet Yellen
will attempt to guide market expectations towards the possibility
of a September rate hike.
Besides the FOMC meeting, a slew of U.S. reports due this week
on second-quarter GDP, durable goods orders and consumer confidence
could provide further clues on the strength of the world's largest
economy.
The weak earnings reports also dampened investor sentiment.
Closer home, there is no need for an interest rate hike soon in
the U.K., Bank of England's Chief Economist Andy Haldane said on
Friday. Haldane repeated that rates could go up or down in the
future and that he thought the current level was appropriate for
the near term.
In the Asian trading today, the pound held steady against its
major rivals.
In the early European trading, the pound fell to nearly a 2-week
low of 191.07 against the yen and and a 2-week low of 0.7159
against the euro, from early highs of 192.19 and 0.7066,
respectively. If the pound extends its downtrend, it is likely to
find support around 186.00 against the yen, 0.72 against the
euro,
Pulling away from an early 4-day high of 1.5543 against the U.S.
dollar, the pound dropped to 1.5489. On the downside, 1.52 is seen
as the next support level for the pound.
Against the Swiss franc, the pound slipped to nearly a 2-week
low of 1.4856 from an early high of 1.4941. The pound is likely to
find support around the 1.45 area.
Meanwhile, the Australian dollar also fell against its major
rivals.
The Australian dollar fell to nearly a 7-1/2-month low of 1.5248
against the euro and more than a 1-1/2-month low of 1.1009 against
the NZ dollar, from early highs of 1.5062 and 1.1073, respectively.
If the aussie extends its downtrend, it is likely to find support
around 1.53 against the euro and 1.06 against the kiwi.
Against the yen and the Canadian dollar, the aussie dropped to
more than a 2-week low of 89.64 and nearly a 2-week low of 0.9451
from early highs of 90.21 and 0.9508, respectively. On the
downside, 89.00 against the yen and 0.93 against the loonie are
seen as the next support level for the aussie.
The aussie edged down to 0.7265 against the U.S. dollar, from an
early high of 0.7302. The aussie may test support near the 0.71
area.
Looking ahead, U.S. durable goods orders data for June is set to
be published in the New York session.
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