Forex – Pound, Turkish Lira under Pressure, Dollar Holds Steady

25

Forex - Pound, Turkish Lira under Pressure, Dollar Holds Steady

binary-news.top – The pound and the Turkish lira were pressured lower in currency markets on Monday, while the dollar remained steady against a currency basket in holiday-thinned trade.

The pound sank to the lowest levels of the day after data showing that UK manufacturing activity fell to its lowest level in two years in August, weighed down by jitters over Brexit and the U.S.-China trade war.

GBP/USD was down 0.77% to 1.2857 by 08:56 AM ET (12:56 GMT), from an intra-day high of 1.2933.

The pound extended early losses after a report showing that the Markit UK manufacturing index dropped to a 25-month low of 52.8 in August, from 53.8 in July.

Sterling had already come under pressure after the European Union’s chief Brexit negotiator Michel Barnier said Sunday that he is “strongly” opposed to British Prime Minister Theresa May’s proposals on future trade after Brexit.

The comments added to concerns over the prospect of a no-deal Brexit.

The pound was also lower against the euro, with EUR/GBP advancing 0.85% to 0.9028.

In emerging markets, Turkey’s lira resumed its decline amid persistent worries over the country’s economic and currency crisis.

Data on Monday showed that Turkish inflation surged to a 15-year high of 17.9% in August, up from 15.9% in July, indicating that the steep selloff in the lira is driving up consumer prices.

Following the inflation data the country’s central bank indicated that a rate hike could be in the offing at its meeting later this month, but investors remain wary given Turkish President Tayyip Erdogan’s firm opposition to high interest rates.

Deteriorating relations between the U.S. and Ankara and worries about Erdogan’s increasing control over monetary policy and the economy have seen the lira tumble more than 40% this year.

The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was holding steady near one-week highs at 95.10, as worries over global trade tensions underpinned safe haven demand for the greenback.

Trade volumes were expected to remain thin, with U.S. financial markets closed for the Labor Day holiday.

Concerns over an escalation of the trade row between the U.S. and China lingered as the Trump administration prepared to impose a fresh round of tariffs on Chinese imports.

U.S. President Donald Trump said last week he was ready to implement tariffs on an additional $200 billion worth of imports from China as soon as Thursday.

The step would escalate the trade row with Beijing, after the U.S. already slapped tariffs on $50 billion of Chinese imports.

Trump has also threatened to withdraw from the World Trade Organization, a move that could undermine the system of global trade.

Meanwhile, trade talks with Canada remained at an impasse after stalling on Friday.

The euro and the yen were little changed against the dollar, with EUR/USD last at 1.1608 and USD/JPY trading at 111.13.

LEAVE A REPLY

Please enter your comment!
Please enter your name here