Home Business Growth worries boost dollar amid sluggish pound sterling ahead of Brexit vote

Growth worries boost dollar amid sluggish pound sterling ahead of Brexit vote

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Money news report as the dollar witnessed a slight boost on Monday, hovering close to a near three-month high as investors continued to favour the greenback amid global growth concerns.

But, the Pound kept declining amid uncertainties over Britain’s pending exit from the European Union.

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The dollar index, which measures the Pound value against a basket of six key rival currencies, gained 0.1 percent to 97.412.

The index was 0.3 percent shy of its recent peak of 97.710 hit last Thursday, its highest since December 2014. It is up 1.3 percent since the beginning of this year.

The Euro was basically flat at 1.1232 per dollar. The single currency had fallen to its weakest level since June 2017 on Thursday, hurt by dovish signals from the European Central Bank (ECB).

“After the ECB’s big downgrade of the growth outlook for the Euro area, together with the weaker-than-expected Chinese export and import data, the worry over the global economy is re-surging again,” chief currency strategist at Mizuho Securities, Masafumi Yamamoto, said.

“That’s pushing down the euro and other currencies,” he said. “The U.S. is not particularly strong, but other areas are weak. That’s why the dollar is relatively strong.”

Data on Friday showed U.S. employment growth almost stalled in February, with the world’s top economy creating only 20,000 jobs, far fewer than expected by analysts.

But traders found some hope in figures showing the U.S. employment rate slipped back below 4 percent and average hourly earnings accelerated by 0.4 per cent, helping to reduce the dollar’s losses during the previous session.

On Monday, most currencies stayed within well-trodden trading ranges before U.S. retail sales figures for January due at 1230 GMT and U.S. February inflation figures expected on Tuesday.

The big exception was the pound, which gave up one-third of a per cent to 1.2973 dollar after briefly dipping to a near three-week low on nervousness over Brexit.

The currency had already fallen for seven straight sessions.

Sterling came under renewed pressure after British foreign minister Jeremy Hunt said on Sunday Brexit could be reversed if lawmakers reject the government’s exit deal.

His remarks followed a warning from two major Euro-sceptic factions in parliament that Prime Minister Theresa May was likely to face heavy defeat in a parliamentary vote on Tuesday on whether to approve her EU exit plan.

The British leader is scrambling – so far unsuccessfully – to secure last-minute changes to an EU exit treaty ahead of the vote, which comes less than three weeks before the United Kingdom is set to leave the European Union on March 29.

“Speculators seem to be taking sell positions in the pound after it was bought for a short time as participants are awaiting the Brexit outcome,” said Yukio Ishizuki, senior currency strategist at Daiwa Securities.

Mizuho’s Yamamoto said traders are trimming holdings of sterling on reduced expectations of a rate hike by the Bank of England, making the currency increasingly sensitive to near-term events, such as the parliamentary vote.

“These days, the UK inflation data isn’t as strong as before,” he said.

“The rate-hike expectation after the avoidance of the no-deal Brexit is fading away.”

Against the Japanese yen, the dollar was a shade lower at 111.125 yen.

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