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Forex News: Pound Falls Amid Risk Aversion On Trade War

Pound Falls Amid Risk Aversion On Trade War Fears

04/04/2018 - 06:15:00 (RTTNews)

(RTTNews) - The pound slipped against its major counterparts in the European session on Wednesday, as European markets dropped after China announced new tariffs on U.S. imports worth $50 billion.

In response to the U.S. tariffs released on Tuesday, China announced tariffs on $50 billion of U.S. products, which includes soybeans, chemicals and some types of aircraft.

Trump administration's decision to impose 25 percent tariffs on Chinese imports worth about $50 billion has provoked a strong response from China and fueled fears about trade war.

Weak U.K. construction PMI for March also weighed on the currency.

Survey data from IHS Markit showed that U.K. construction activity contracted unexpectedly in March following five months of marginal growth.

The IHS Markit/Chartered Institute of Procurement & Supply construction Purchasing Managers' Index fell to 47.0 in March from 51.4 in February. The reading was expected to ease to 51.0.

Data from the British Retail Consortium showed that shop prices in the United Kingdom dropped 1.0 percent year-on- year in March. That followed the 0.8 percent contraction in February.

The currency rose against its major rivals in the Asian session, with the exception of the euro.

The pound weakened to 0.8745 against the euro, after having advanced to 0.8715 at 11:45 pm ET. The pound is seen finding support around the 0.89 region.

Flash data from Eurostat showed that Eurozone inflation accelerated in March largely on food prices.

Inflation rose to 1.4 percent in March from 1.1 percent in February. A similar higher rate was last seen in December.

The pound slipped to 1.3452 against the franc and 149.14 against the yen, from its early near a 2-year high of 1.3500 and a 6-day high of 150.11, respectively. The next possible support for the pound is seen around 1.33 against the franc and 147.00 against the yen.

Reversing from an early weekly high of 1.4097 versus the greenback, the pound edged down to 1.4042. On the downside, 1.38 is seen as the next support level for the pound.

Looking ahead, U.S. factory orders for February, ADP private payrolls, Markit's services PMI and ISM non-manufacturing composite index for March are set for release in the New York session.

At 11:00 am ET, Cleveland Fed President Loretta Mester speaks about diversity in economics at Central State University in Ohio.

For comments and feedback: contact editorial@rttnews.com

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