Pound Falls in London Trading as May Gets Brexit Go-Ahead

  • Pound Falls in London Trading as May Gets Brexit Go-Ahead

The pound tumbled against all of its Group-of-10 peers as London traders sold down the currency after U.K. Prime Minister Theresa May was given the go-ahead to trigger Brexit in the last week of March.

The currency fell as much as 0.5 percent to $1.2153. During the Asian session, option-related bids under $1.2200 strikes expiring all week were filled, while macro offers between $1.2220/50 were layered, according to Asia-based traders.

“There is no particular headline, but I’m seeing early sellers out of Europe,” said Stephen Innes, a senior currencies trader at Oanda Corp. in Singapore. “I suspect more a case of pre-Article 50 jitters and to a lesser degree the Scottish referendum. Risk in general is holding up so I suspect the combination of Fed policy and political uncertainty are the main culprits.”

The selloff comes a day after Scottish First Minister Nicola Sturgeon signaled the start of a legal process for an independence referendum, while the U.K. parliament gave May permission to start Brexit talks. The dollar traded in a tight range against most other major peers with turnover below average as traders held on to positions ahead of the Federal Open Market Committee two-day policy meeting starting today.

Australia’s dollar fell after February business confidence declined though losses were stemmed by a mixed set of Chinese economic data.

  • AUD/USD drops 0.2% to 0.7557
    • Poor business sentiment weigh spot down to 0.7550 where option-related bids were filled, traders say
    • February NAB business confidence falls to 7 from 10 in January; business conditions index is also down to 9 from 16 the previous month
  • USD/JPY is sold down from session highs to clear a large sell order that was executed at the Tokyo fix which was set near 114.85 level, slightly down from New York close, a trader says
  • China’s retail sales missed estimates to fall below 10 percent for the first time since 2003, while fixed-asset investment and industrial output improved
    • “While China retail sales disappointed the market consensus, the overall picture including industrial production and fixed-asset investment, illustrates solid underlying momentum in early 2017,” says Peter Dragicevich, an FX strategist at Nomura. “These positive elements should help stabilize the Aussie dollar following the modest dip earlier today”

About the Author

Samed Olukoya
CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade long experience in the global financial market. Contact Samed on Twitter: @sameolukoya

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