· The British pound lay battered in Asia on Friday after a bout of political turmoil fanned fears the country could crash out of the European Union without a divorce deal.
Sterling tumbled on Thursday after a series of resignations rocked British Prime Minister Theresa May’s government and threw into doubt her long-awaited Brexit agreement just hours after it was unveiled.
The pound slumped nearly 2 percent against the dollar and euro and was set for its biggest daily drop this year after Brexit minister Dominic Raab resigned to protest at the draft deal with the European Union. Three other ministers followed suit.
Fears that May’s hard-fought Brexit deal could collapse sent British financial markets into gyrations not seen since the sell-off following the June 2016 referendum on EU membership.
In volatile trading, the pound GBP=D3 sank 1.9 percent to $1.2730, its biggest daily drop this year. At 1750 GMT sterling was down 1.7 percent against the euro at 88.85 pence. EURGBP=D3
Traders flocked into the perceived safety of the dollar and yen as the pound gyrated this week over Brexit. On Thursday, British Prime Minister Theresa May said she won the backing of her senior ministers for a draft divorce deal, but many in her government are unconvinced and on Thursday her Brexit minister Dominic Raab, and other ministers, resigned.
An index that tracks the greenback against six major currencies was up 0.18 percent at 96.981. It touched a 16-month high of 97.693 on Monday.
The dollar was down 0.07 percent at 113.54 yen.
· Prime Minister Theresa May vowed to fight for her draft divorce deal with the European Union on Thursday after the resignation of her Brexit secretary and other ministers put her strategy and her job in peril.
· The Federal Reserve should hold off on raising U.S. interest rates to allow more workers to get jobs, adding that the central bank can always raise rates to head off inflation if it starts to rise too fast, Minneapolis Fed President Neel Kashkari said on Thursday.
peaking at the Minnesota Ag and Food Summit, Kashkari said he sees no signs of overheating yet, or of inflation taking off. Low wage growth suggests there is more slack in the labor market, he said.
· The U.S. Federal Reserve should “proceed cautiously” with interest rate increases, keeping a “keen eye on the data” so as to raise rates far enough to prevent overheating but not so far that it short-circuits economic growth, Atlanta Fed President Raphael Bostic said on Thursday.
· The Federal Reserve, under pressure from a critical White House even while it largely hits its inflation and employment targets, will conduct an extensive review next year of how it guides the U.S. economy as it seeks to become more open and accountable.
· Oil futures rose for the second consecutive session on Thursday after this week’s steep losses as U.S. fuel stockpiles declined and a possible cut in OPEC output helped support prices.
Brent crude futures rose 50 cents to settle at $66.62 a barrel. U.S. West Texas Intermediate (WTI) crude futures rose 21 cents to settle at $56.46 a barrel.
Reference: Reuters
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