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Forex News: Pound Falls On Risk Aversion, Worries Over Brexit

Pound Falls On Risk Aversion, Worries Over Brexit Talks

08/29/2017 - 06:57:00 (RTTNews)

(RTTNews) - The pound weakened against its most major opponents in early European deals on Tuesday, with the lack of progress in the Brexit discussions and intensifying geopolitical tensions over North Korean missile launch into Japan keeping investors nervous.

The missile flew over the northern Japanese island of Hokkaido at 6:06 am local Japanese time, according to Japan's state broadcaster NKH.

Japanese PM Shinzo Abe condemned the launch, calling the action as "an unprecedented, serious and grave threat" to Asia's second-largest economy, and said that he and U.S. President Donald Trump are in complete agreement to hike pressure on North Korea.

Investors also focused on the effects of Tropical Storm Harvey that struck Houston, Texas, and many oil refineries in the U.S. Gulf Coast.

European Commission President Jean-Claude Juncker asserted that negotiations on the new economic and trade relationship between the UK and the EU would begin only after divorce issues were settled.

"I've read all the position papers produced by Her Majesty's government and none of them is satisfactory,"Juncker said.

Data from Nationwide Building Society showed that UK house prices increased at a slower pace in August.

House prices increased 2.1 percent year-on-year in August, slower than the 2.9 percent growth seen in July. This was also weaker than the expected growth of 2.5 percent.

The pound showed mixed performance in the Asian session. While the currency dropped against the yen and the franc, it rose against the greenback. Against the euro, it held steady.

Extending early slide, the pound slipped to more than a 5-month low of 1.2227 against the Swiss franc. This may be compared to a high of 1.2356 hit at 5:00 pm ET. On the downside, 1.19 is likely seen as the next support level for the pound-franc pair.

The pound retreated to 140.41 against the yen, from its early high of 141.29. This may be compared to a 5-day low of 140.01 set in Asian trading. If the pound-yen pair extends decline, it may locate support around the 138.00 region.

Data from the Ministry of Internal Affairs and Communications showed that Japan's jobless rate came in at a seasonally adjusted 2.8 percent in July - in line with expectations and unchanged from the June reading.

The number of employed persons in July was 65.63 million, an increase of 590,000 or 0.9 percent on year.

The pound hit near an 8-year low of 0.9306 against the euro, after having advanced to 0.9247 at 10:45 pm ET. The next possible support for the pound is seen around the 0.96 level.

Survey data from the market research group GfK showed that German consumer confidence is set to strengthen in September.

The forward-looking consumer sentiment index rose to 10.9 in September from 10.8 in August. The score was forecast to remain unchanged at 10.8.

On the flip side, the pound appreciated to a new 2-week high of 1.2979 against the greenback, compared to yesterday's closing value of 1.2931. The pound is poised to challenge resistance around the 1.32 area.

Looking ahead, Canada industrial product and raw material price indexes for July and U.S. S&P/Case-Shiller home price index for June and U.S. consumer confidence index for August are due to be released in the New York session.

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