Pound remains weaker

9 June, 2017

Pound remains weaker

Sterling remained weaker in Asia on Friday as UK elections pointed to a hung parliament and the potential ouster of Theresa May as prime minister should the Conservatives struggle to form a coalition if needed, though Nomura suggested they might reach 322 seats and cobble a government.GBP/USD fell 1.45% to 1,2762. USD/JPY rose 0.29% to 110.29, while AUD/USD fell 0.13% to 0.7532. The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose 0.40% to 97.31.China reported CPI for May with a 0.1% drop on month, less than the 0.2% dip seen and a 1.5% increase on year as expected. PPI rose 5.5%, less than the annual pace of 5.7% expected and a dip from a 6.4% gain in April. As well, Austrlia reported home loans figures dropped 1.9% for April with a 1.0% decline seen on month.Overnight, the dollar rose against a basket of currency on Thursday, as the risk-on trade resumed, after testimony from former FBI Director James Comey to the Senate Committee was less controversial than many had feared, easing investor concerns about a sharp rise in U.S. political turmoil.Investors were relived as former FBI Director James Comey’s public testimony to the Senate Committee offered little to spark further political turmoil in Washington, after he confirmed that President Donald Trump was not directly under investigation at the time he was fired.But Comey added that the White House "chose to defame me, and more importantly the FBI "by claiming the agency was "poorly led." Comey’s public testimony has concluded, although he will meet this afternoon with senators in private session.In a speech in Washington on Thursday, President Trump remained defiant, saying he and his supporters “are under siege” but "will come out bigger and better and stronger than ever."A slump in the euro to a six-day low was the initial catalyst for the move higher in the greenback, as the European Central Bank (ECB) scaled back inflation expectations for the next two years.The euro fell as the European Central Bank hinted at further interest rate cuts, and ECB President Mario Draghi lowered euro zone inflation expectations for the next two years, suggesting that interest rates were likely to remain at current levels for “an extended period of time."


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