Pound retreats from 10-month high on concerns over political rift

Pound retreats from 10-month high on concerns over political rift

The British pound fell from a 10-month high versus the U.S. dollar on Monday amid worries of political disarray among May’s Cabinet ahead of the start of the second round of Brexit talks.

After three straight sessions of gains, hitting a peak of 1.3112 on Friday, the pound hit a bottom of 1.3057 against the green currency.

Traders are currently wary as Britain started a four-day negotiation with the EU in Brussels, discussing EU citizens’ rights.

The split among May’s Cabinet would disallow the U.K. to reach a good deal that guarantees a minimal economic social damage after leaving the EU block.

Transitional arrangements are likely to last a couple of years, said Chancellor of the Exchequer Phillip Hammond at the weekend. That would far longer than the couple of months suggested by Trade Secretary Liam Fox.

The market is predicted to be very sustentive to the Brexit negotiations, especially issues related to Britain’s access to European markets.

Investors will keep their eyes on U.K. CPI inflation and retail sales data due this week.  

Last week, the dollar index tumbled to a 10-month low after downbeat U.S. inflation and retail sales data that raised doubts about the Federal Reserve’s interest rate hike paths.

The EURGBP traded higher for the first time in five sessions at 0.8768, compared to the session’ open at 0.8747.

The pound incurred a hefty loss against the Swiss franc, shedding 0.76 percent to 1.2537, while currently trading lower at 146.95 against the Japanese yen.

Ahmed Mamdouh

Ahmed Mamdouh, Co-Founder and Head of English Fundamental Analysis at FXComment.com, with 7 years of experience in the financial markets. Mamdouh holds a Master’s Degree in Economics from The American University in Cairo and a Bachelor Degree in Economics from The Faculty of Economics and Political Science, Cairo University.

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