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Forex News: Pound Weakens After BoE Carney Says No-deal Brexit

Pound Weakens After BoE Carney Says No-deal Brexit Risk "uncomfortably High"

08/03/2018 - 05:58:00 (RTTNews)

(RTTNews) - The pound slipped against its major counterparts in the European session on Friday, after the Bank of England Governor Mark Carney warned that the likelihood of no-deal Brexit "is uncomfortably high."

"I think the possibility of a 'no deal' is uncomfortably high at this point," Carney told BBC Radio.

He said that a no-deal Brexit would disrupt trade and the level of economic activity, while pushing consumer prices higher.

"Our job in the Bank of England is to make sure that those things don't happen. It's relatively unlikely but it is a possibility. We don't want to have people worrying that they can't get their money out," he added.

Survey data from IHS Markit showed that British service sector growth eased more-than-expected in July to the weakest level in three months.

The IHS Markit/Chartered Institute of Procurement & Supply Purchasing Managers' Index dropped to 53.5 in July from 55.1 in June. The index was forecast to drop to 54.7.

Prime Minister Theresa May is set to meet French President Emmanuel Macron at his "summer Elysee Palace" on the Mediterranean coast today to lay out London's position on the Brexit talks and its future relations with the EU.

The currency held steady against its major counterparts in the Asian session.

The pound declined to more than a 2-week low 1.2976 against the greenback, after having advanced to 1.3027 at 1:45 am ET. The pound is seen finding support around the 1.27 level.

Reversing from an early high of 1.2967 against the Swiss franc, the pound hit a 5-month low of 1.2925. On the downside, 1.28 is possibly seen as the next support level for the pound.

Data from the Federal Statistical Office showed that Switzerland's consumer price inflation continued to rise in July.

Consumer price inflation rose to 1.2 percent in July from 1.1 percent in June. The rate came in line with expectations.

The pound weakened to 0.8919 against the euro, reversing from a high of 0.8897 seen at 2:15 am ET. If the pound drops further, 0.90 is likely seen as its next support level.

Data from IHS Markit showed that euro area private sector growth eased in July, ceding most of the momentum gained in the prior survey month.

The composite output index fell to 54.3 in July, in line with flash estimate, from 54.9 in June.

After rising to 145.50 against the yen at 8:45 pm ET, the pound reversed direction and fell to 145.02. The next likely support for the pound is seen around the 143.00 level.

The latest survey from Nikkei showed that Japan's services sector continued to expand in July, albeit at a slower pace, with a PMI score of 51.3.

That's down from 51.4, although it remains above the boom-or-bust line of 50 that separates expansion from contraction.

Looking ahead, U.S. jobs data and ISM non-manufacturing composite PMI for July and trade data for June, as well as Canadian trade data for the same month are scheduled for release in the New York session.

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