Pound Weakens As May To Reject Barnier's Irish Border Offer
19 September 2018 - 7:02PM
RTTF2
The pound declined against its major counterparts in the
European session on Wednesday, trimming its early gains, after a
media report showed that U.K. Prime Minister Theresa May would
reject Michel Barnier's "improved" offer to solve the Irish border
issue, alleging violation of Britain's red lines.
According to The Times, the U.K. has decided to abandon
Barnier's offer to solve the Irish border issue.
The U.K. is said to believe that Barnier's plan still treats
Northern Ireland as a separate customs jurisdiction from the rest
of the UK, it said.
"No side can demand something totally unacceptable from the
other, such as an external border between parts of the UK," May
said, ahead of meeting other EU leaders in the Austrian city.
The currency was trading higher early in the session, after a
data showed that U.K. inflation rate hit a six-month high in
August.
Data from the Office for National Statistics showed that
consumer price inflation increased unexpectedly to 2.7 percent in
August from 2.5 percent in July. This was the highest rate since
February. Economists had forecast inflation to ease to 2.4
percent.
The pound dropped to 147.20 against the yen, after rising to
more than a 2-month high of 148.54 at 4:30 am ET. The pound is
poised to find support around the 146.00 region.
The Bank of Japan kept its ultra-loose monetary policy
unchanged, as widely expected.
The policy board of the BoJ decided to purchase government bonds
so that the yield of 10-year JGBs will remain at around zero
percent.
The pound fell to a 5-day low of 0.8919 against the euro, from a
1-1/2-month high of 0.8861 seen at 4:45 am ET. On the downside,
0.91 is possibly seen as the next support level for the pound.
Data from the European Central Bank showed that the euro area
current account surplus decreased in July largely due to a fall in
visible trade surplus.
The current account surplus fell to a seasonally adjusted EUR 21
billion in July from EUR 24 billion in June.
Pulling away from near a 6-week high of 1.2775 hit at 7:00 am
ET, the pound eased back to 1.2697 against the franc. The next
possible support for the pound is seen around the 1.25 level.
The Swiss federal government's expert group raised its growth
outlook for 2018 but maintained the estimate for 2019.
The State Secretariat for Economic Affairs said the economy is
forecast to grow 2.9 percent this year instead of 2.4 percent
projected in June. The outlook for 2019 was retained at 2
percent.
The pound hit a 2-day low of 1.3099 versus the greenback, from
more than a 2-month high of 1.3215 touched at 4:30 am ET. If the
pound falls further, 1.29 is likely seen as its next support
level.
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