British pound at 11-month low versus dollar as Brexit fears flare up
“The biggest story of the day was the continued slide in cable which hit fresh 11 month highs as it dipped below towards $1.2950 support on renewed fears of a hard Brexit,” wrote Boris Schlossberg, managing director of FX Strategy BK Asset Management.
Trade minister Liam Fox in an interview with the Sunday Times ascribed a 60% chance of no deal resulting from Britain’s negotiations to exit from European Union trade pact, known as Brexit. A so-called ‘hard Brexit’ would leave the U.K. without a predefined agreement on the relationship between Brussels and London after Britain officially leaves the EU in March 2019.
The British pound GBPUSD, -0.6230% fell to $1.2928 from $1.3002, its lowest level since September last year.
Also check out: Hawkish Bank of England brings caution, not confidence, to British pound traders
Cable—as the sterling-dollar pair is also called—“is trading on waves of uncertainty and will now become even more susceptible to any news headlines as the deadline to Brexit draws nearer,” Schlossberg said.
Key issues still remain around the border between Northern Ireland, which is part of the U.K., and the Republic of Ireland, which is an EU member state, as well as the free movement of people across the EU.
Otherwise it was “a very quiet start to the week’s trade with Japan markets closed and no major data on the docket anywhere in the G11 universe,” Schlossberg said. The biggest data point of the week will be U.S. consumer price inflation due on Friday.
The U.S. dollar strengthened across the board on Monday, though volumes were thin, Schlossberg added. The ICE U.S. Dollar Index DXY, +0.24% was up 0.4% at 95.509. Last week, the gauge gained 0.5%.
Read: Why the dollar is lacking a near-term driver
The broader WSJ Dollar Index BUXX, +0.32% which measures the greenback against 16 rival currencies, was up 0.3% at 89.03, as emerging-market assets weakened.