Survey data showed Britain’s services sector stalled last month due to concerns about Brexit and point uncertainty as the main feature of the Pre-Brexit economy.
With a BoE policy meeting on Thursday and a national election less than six weeks away, investors will be watching closely any changes in opinion poll trends for the major political parties before adding positions on the pound. The BoE is almost certain to hold rates at 0.75%. However, weak economic data makes it increasingly likely that its next move will be a cut rather than a hike.
While the risk of a “no-deal” Brexit is considered to have been reduced, the main parties are at odds over how the divorce agreement should look. Aside from Brexit and election newsflow, the Bank of England will be watching the economic data with some concern.
The Bank of England warned on Tuesday it will crack down on insurers that are overly optimistic about how much capital they need to cover growing risks from the United States and elsewhere.
The British pound floated higher but stayed within recent trading ranges. Against the dollar, the pound rose 0.2% at $1.2901, coming off an earlier session high of $1.2904. Versus the euro, the pound edged 0.1% up to 86.25 pence.
START TRADINGForex – Pre-Brexit economy marked by uncertainty
Trade-oriented currencies surged on increasing signs that Beijing and Washington are inching closer to a trade deal.
The U.S. dollar was broadly flat against a basket of currencies but advanced 0.3% against the safe-haven yen and Swiss franc.
Τhe Australian dollar close to recent three-month highs and the highest versus the yen since the end of July. It wasn’t much moved after the central bank left monetary policy unchanged, as expected. The kiwi dollar rose 0.3%.
The Canadian dollar rose to near a one-week high against its U.S. counterpart on Tuesday. Data showed a narrowing in Canada’s trade deficit and investors became more optimistic of a trade deal between the United States and China. The loonie was trading 0.1% higher at 1.3139 to the greenback
The euro was slightly down against the dollar. It rose 0.24% versus the yen. The common currency would be one of the last currencies to benefit from improved risk sentiment.
Oil prices rose on hopes for a U.S.-China trade agreement and optimism that Washington could roll back some of the tariffs imposed on Chinese imports. Brent crude was up 61 cents, or 1%, at $62.74 a barrel by 1136 GMT. U.S. crude rose 42 cents, or 0.7%, to $56.96. Investors are also awaiting U.S. inventory data due later on Tuesday.
Gold eased on increasing risk appetite amongst investors, driven by optimism on U.S.-China trade talks and fading fears of a global economic slowdown. Spot gold fell 0.1% to $1,511.44 per ounce at 1220 GMT. U.S. gold futures edged 0.2% higher at $1,513.70.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, Investing, CNN money