August 13, 2022

Forex Trading: No-deal Brexit fears hit Sterling

LQDFX news blog: Forex Trading: No-deal Brexit fears hit Sterling

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No-deal Brexit and lack of transition agreement hits the Sterling which dropped below $1.29 to a one-year low, on Wednesday.

The selloff was boosted by traders’ view that a no-deal Brexit is a growing possibility. In less than 8 months Britain has to exit the EU and a trade deal has not been reached yet.

On Sunday Britain’s Trade Minister Liam Fox warned that the likelihood of a no-deal outcome is as high as 60%.

Further, the British pound fell against the single currency, swiss franc and yen. The pound has fallen 10.6% since mid-April versus the greenback and is down almost 5% year-to-date.

Chinese imports to US: Second batch of tariffs on $16 billion of goods

China’s July trade data showed that Chinese exports rise despite trade war escalation by the US administration. These data, which were the first since Trump imposed tariffs on $34 billion of Chinese imports last month, showed a faster-than-expected rise in China’s exports and imports. The country’s trade surplus with the United States did not changed.

In the meanwhile, the USA administration is getting prepared for snapping 25% tariffs on another $16 billion of Chinese goods later this month.

However, it seems that market sensitivity to trade war headlines has declined. Traders probably want evidence proving that the dispute is having real impact before they panic.

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The Dollar edged lower 0.2% against its major traded rivals as investors calmed down following Chinese trading data.

The Euro inched up 0.2% against the greenback. Chinese trading data showing that China’s July exports rose more than expected, despite U.S. tariffs, halted the Dollar’s rally.

The Yen strengthened following reports that BOJ board members’ disagreement on rates during their policy meeting last week. The Japanese currency rose 0.5% against the dollar.

The Australian Dollar, often seen as a liquid proxy of China-related trades, headed lower 0.1% to $0.7413.

The Sterling dropped below $1.29 to a one-year low. Further, it fell against the single currency, to a 9-month low, amid no-deal Brexit and lack of transition agreement.

Oil prices remained unchanged supported by US sanctions on Iran and falling US crude inventories.

Gold prices and silver prices edged lower ahead of new US tariffs on Chinese imports and respective trade dispute worries.

Sources: Reuters, CNN money, bbc

PLEASE NOTE The information above is not investment advice.