As Brexit talks tensions rise, the pound dived towards near three-year lows against the euro on Tuesday. The UK headed towards a showdown with the European Union over Brexit negotiations.
British Prime Minister Boris Johnson fired the opening salvo in his bid to renegotiate Britain’s divorce terms from the EU. He says they should be replaced with a pledge. The bloc and its leaders have repeatedly refused to reopen the Withdrawal Agreement. European Council President said a letter sent to him by Johnson included no “realistic alternatives” to the contentious Irish backstop.
Johnson will meet both French President and German Chancellor during the week. He is also planning to meet Irish Prime Minister Leo Varadkar in September.
The headlines sapped demand for the British currency in a thin August market. Investors geared up for more volatility when the British parliament resumes business in early September. Johnson has said Britain will leave the EU on Oct. 31 with or without a withdrawal deal.
Against the euro, the pound weakened by 0.5% to 91.71 pence, not far away from an October 2016 low of 93.26 pence hit last week.
Versus the dollar, the British currency fell by 0.4% to $1.2084, approaching a January 2017 low of $1.2015 hit last week. The falls came after signs in recent weeks that investors were becoming less pessimistic on the pound.
START TRADINGForex – Brexit talks tensions rise – Pound down
The dollar index was flat at 98.375 after earlier rising to a two-and-a-half-week high of 98.40. It reached its 2019 high of 98.932 at the beginning of the month.
The euro hovered near a two-week low against the dollar on Tuesday. Higher Treasury yields the day before boosted the U.S. currency. Political uncertainty in Italy also held the euro back. The euro was also flat at $1.1078, but not far from Friday’s $1.1066 low, amid concern over political developments in Italy.
Against the Swiss franc, the euro was down by 0.2% at 1.0855, near the two-year low of 1.0836 it reached last week.
Gold rose back above $1,500 an ounce on Tuesday, rebounding from the previous day’s sharp losses. Investors switched focus to the minutes of the U.S. Federal Reserve’s latest meeting.
Among other precious metals, silver rose above the key $17 mark, gaining nearly 1% to $17.03 per ounce.
In commodities, oil prices fell on Tuesday on persistent concerns over future demand. But, losses were capped by optimism U.S.-China trade tensions will ease.
Brent crude was down 51 cents at $59.23 a barrel by 1339 GMT. U.S. crude was down 73 cents at $55.48 a barrel. Both contracts had traded in positive territory earlier in the session.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, Investing, CNN money