The sterling is on the way for its biggest weekly drop in 7 weeks, below the chart support around $1.26.
Sterling fell more than 0.5% on Friday. UK Prime Minister returned from Brussels, where she failed to win assurances from EU leaders over her Brexit agreement.
May survived a no-confidence vote by her Conservative Party on Wednesday. She then asked EU leaders for political and legal assurances. Her purpose was to convince the British parliament to approve her deal. However, the German Chancellor and the French President rejected any reopening of last month’s treaty.
The trip has not gone well in currency markets as well. The British pound fell to a day’s low of $1.2591 in early European trade. The pound was flat against the euro at 89.70 pence as weak European PMI data sent the single currency lower.
On a weekly basis, the pound is set for its biggest drop in seven weeks. The currency markets digested the tough task that May had ahead of her to win concessions from the EU. Sterling is still near the bottom of its recent range. Further, traders believe that a 20-month low of $1.2477 hit on Wednesday will act as a temporary support for the battered currency.
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The dollar edged higher as investors turned nervous about a slowdown in China. The dollar was broadly supported as the euro and pound came under pressure. The greenback which is up 1% since Monday heads for its best weekly performance since late September. Against a basket of its major traded rivals the dollar rose 0.4%, with its index at 97.455.
The euro fell on Friday as the euro zone economy showed more signs it’s beginning to babble. The single currency was hurt on Thursday when the European Central Bank cut forecasts for economic growth and inflation. The euro fell 0.4% to $1.1308 in early European trade.
The Australian dollar — a gauge of China’s economic fortunes — lost 0.8% to $0.7169 as China is Australia’s largest trade partner.
The yen remained unchanged at 113.59 yen per dollar. The dollar has gained 1.2% versus the Japanese currency in the past six trading sessions. Interest rate differentials between U.S. and Japan support the dollar.
Sources: Reuters, CNN money, Bloomberg
PLEASE NOTE The information above is not investment advice.