Brexit News: Pound Inches Up before Brexit Vote
BREXIT NEWS – On Tuesday, the British pound gained some focus. Further, it edged up in Asia amid the anticipated vote on the Brexit Deal of U.K. Prime Minister Theresa May.
Within the day, the UK parliament is set to vote down the Brexit plan of May. According to analysts, the market broadly expects the defeat. Despite that, there’s a possibility that it will provoke a volatile knee-jerk market reaction if May loses the vote by a wide margin.
“Losing by 100 or more votes is a major defeat but there’s some talk that she could lose by 200 votes. A major loss will lead to a knee jerk decline in GBP that could take GBP/USD below 1.25 and EUR/GBP above 91 cents,” said BK Asset Management Currency Strategy Director Kathy Lien.
As of 12:16 AM ET (05:16 GMT), the GBP/USD traded at 1.2897, higher 0.03%.
As for the USD/CNY, the pair inched up at 6.7684 after the pledge of Beijing. This regarding its possible tax cuts on a larger scale to back the country’s cooling economy.
Meanwhile, the People’s Bank of China‘s Deputy Governor Zhu expressed confidence that PBOC will maintain the stability of the yuan. This is despite the central bank’s plans to cut the reserve requirement ratio (RRR). Based on a Reuters report, PBOC had already cut the RRR today. Further, this was amid the earlier announcement of the second round of a cut.
For today, PBOC set a 6.7542 reference rate for yuan. This was in comparison with the previous day’s fix of 6.7560 for the Chinese currency.
Brexit News: Dollar drops, Pound inches up ahead of Brexit vote
On Tuesday, the greenback declined amid the increasing expectations that the Fed Reserve will pause its rate hikes for 2019. Further, this was due to the global growth slowdown. Meanwhile, the British pound inched up ahead of Britain’s parliamentary vote on its Brexit plan.
The sharp global slowdown worries are escalating due to emerging concerns. These particular concerns are the losing steam of the US economy and the sudden contraction in Chinese trade. Meanwhile, there are expectations that the Fed will further tighten its monetary policy this year.
The US Dollar Index, which measures the greenback’s strength against major peers, dropped 0.12 percent to 95.48.
“There is a strong dislike for the dollar given Fed expectations, but at the same time, there is not a compelling replacement. Over the next 6-12 months, the dollar should trend lower,” said Bank of Singapore Currency Strategist Sim Moh Siong.