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Forex News: Pound Slides After BoE Broadbent's Remarks

Pound Slides After BoE Broadbent's Remarks

05/13/2019 - 05:31:00 (RTTNews)

(RTTNews) - The pound fell against its major counterparts in the early European session on Monday, after Bank of England Deputy Governor Ben Broadbent cautioned that a prolonged delay to Brexit would damage the long-term economic outlook and asserted that further interest rate hikes would be "gradual."

Speaking at the Press Association news agency, Broadbent remarked that investment has been experiencing the consequences of the uncertainty about Brexit and particularly the possibility of a bad outcome.

"If you continually expect news to arrive imminently - a resolution - then that can have quite a depressing effect on investment," he said.

Broadbent emphasized that future interest rate increases would be limited and gradual.

Broadbent's comments were in contrast with those made by BoE Governor, who said earlier that increases would need to be more frequent than financial markets expect.

Trade concerns persisted as the U.S.-China trade talks ended without an agreement.

U.S. President Donald Trump on Sunday defended his tariff policy, saying we are right where we want to be with China.

"Remember, they broke the deal with us & tried to renegotiate. We will be taking in Tens of Billions of Dollars in Tariffs from China," Trump said on Twitter.

The currency traded mixed against its major counterparts in the Asian session. While it held steady against the euro and the greenback, it fell against the yen and the franc.

The pound declined to a 4-day low of 142.53 against the yen, from a high of 142.87 hit at 2:45 am ET. The pound is likely to target support around the 140.00 mark.

Preliminary data from the Cabinet Office showed that Japan's leading index reached its lowest level since mid-2016.

The leading index, which measures the future economic activity, declined to 96.3 in March from 97.1 in February. The score matched economists' expectations.

The pound fell back to 1.3123 against the franc, not far from a 4-week low of 1.3119 seen at 5:30 pm ET. The pound is seen finding support around the 1.29 level.

Pulling away from a high of 1.3017 touched at 2:45 am ET, the pound reversed direction, falling back to 1.2998 against the greenback. The next possible support for the pound is possibly seen around the 1.28 level.

The pound edged down to a session's low of 0.8642 against the euro and held steady thereafter. The pair was valued at 0.8635 when it ended deals on Friday.

In today's events, Federal Reserve Governor Richard Clarida will deliver a speech at an event hosted by the Federal Reserve Bank of Boston at 9:05 am ET.

For comments and feedback: contact editorial@rttnews.com

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