Pound Falls Amid Risk Aversion On Trade War Fears
04 Avril 2018 - 08:15AM
RTTF2
The pound slipped against its major counterparts in the European
session on Wednesday, as European markets dropped after China
announced new tariffs on U.S. imports worth $50 billion.
In response to the U.S. tariffs released on Tuesday, China
announced tariffs on $50 billion of U.S. products, which includes
soybeans, chemicals and some types of aircraft.
Trump administration's decision to impose 25 percent tariffs on
Chinese imports worth about $50 billion has provoked a strong
response from China and fueled fears about trade war.
Weak U.K. construction PMI for March also weighed on the
currency.
Survey data from IHS Markit showed that U.K. construction
activity contracted unexpectedly in March following five months of
marginal growth.
The IHS Markit/Chartered Institute of Procurement & Supply
construction Purchasing Managers' Index fell to 47.0 in March from
51.4 in February. The reading was expected to ease to 51.0.
Data from the British Retail Consortium showed that shop prices
in the United Kingdom dropped 1.0 percent year-on- year in March.
That followed the 0.8 percent contraction in February.
The currency rose against its major rivals in the Asian session,
with the exception of the euro.
The pound weakened to 0.8745 against the euro, after having
advanced to 0.8715 at 11:45 pm ET. The pound is seen finding
support around the 0.89 region.
Flash data from Eurostat showed that Eurozone inflation
accelerated in March largely on food prices.
Inflation rose to 1.4 percent in March from 1.1 percent in
February. A similar higher rate was last seen in December.
The pound slipped to 1.3452 against the franc and 149.14 against
the yen, from its early near a 2-year high of 1.3500 and a 6-day
high of 150.11, respectively. The next possible support for the
pound is seen around 1.33 against the franc and 147.00 against the
yen.
Reversing from an early weekly high of 1.4097 versus the
greenback, the pound edged down to 1.4042. On the downside, 1.38 is
seen as the next support level for the pound.
Looking ahead, U.S. factory orders for February, ADP private
payrolls, Markit's services PMI and ISM non-manufacturing composite
index for March are set for release in the New York session.
At 11:00 am ET, Cleveland Fed President Loretta Mester speaks
about diversity in economics at Central State University in
Ohio.
Euro vs Sterling (FX:EURGBP)
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