Sterling fell below $1.27 for the first time since mid-January, battered by dollar strength and growing fears around Brexit. UK Prime Minister May will probably fail to persuade cabinet colleagues to back an amended version of her Brexit deal.
Brexit uncertainty has grown in recent weeks after the breakdown of talks between May and the opposition Labour party. That has set the stage for the thrice-rejected fail to fail again if, as planned, it is put to vote in parliament next month.
Also weighing on the pound in recent weeks has been a firmer dollar, which has benefited from an escalation in trade tensions between Washington and Beijing.
The pound slipped 0.2% to $1.2688 while against the euro it was down 0.14% to a new four-month low of 87.88 pence. Sterling’s weakness was exacerbated by the dollar rising to 2-1/2 week highs against major currencies, thanks to safe-haven flows sparked by the U.S.-China trade row.
On derivative markets, implied volatility gauges or expected swings in sterling were still holding at more than one-year lows plumbed last month.
START TRADINGForex – Sterling below $1.27 as Brexit fears grow
The US dollar hit a 2-1/2 week high against a basket of six major currencies, rising 0.2% to a high of 98.11. The greenback may have also been helped by higher U.S. Treasury yields.
The euro — which makes up a significant chunk of that basket — hit a 2-1/2 week low of $1.1142, down 0.2% on the session. The single currency is being hurt by dollar strength and also by upcoming European parliamentary election.
Oil prices rose on Tuesday on escalating U.S.-Iran tensions and amid expectations that OPEC producers will continue to curb supply this year. Brent crude were at $72.31 per barrel at 1030 GMT, up 34 cents, or 0.5%, from their last close. WTI crude futures were up 42 cents, or 0.7%, at $63.52 per barrel.
Gold prices slipped to a more than two-week low on Tuesday, as the dollar strengthened. Improved risk appetite took the sheen off bullion ahead of the release of minutes from the U.S. Federal Reserve’s latest policy meeting. Spot gold was down 0.4% at $1,272.42 an ounce at 1210 GMT. U.S. gold futures also fell 0.4%, to $1,272.00 an ounce.
Silver was down 0.2% at $14.44 an ounce, closing in on the five-month low touched in the previous session.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, Investing, CNN money