POUND LIVE: Sterling weakens against US dollar and euro as Brexit talks stumble | City & Business | FinanceHeat Profit
Sterling was trading at $1.3376 in early morning trading, sliding 0.2 per cent after hitting a one week low of $1.3363 on Wednesday.
The pound has steadily declined against the dollar since November 30 – when it hit a two month high of $1.3548 – as British Prime Minister Theresa May struggles to begin negotiations for the UK’s exit from the EU due to conflict over the Irish border.
On Monday, the UK government was forced into a u-turn on a deal with the EU after objections from Northern Ireland’s Democratic Unionist Party which saw its leader Arlene Foster raising concerns over plans to align the country with EU member Ireland, sending Theresa May back to the drawing board. The Conservatives now rely on the support of the DUP – which has 10 elected ministers – to push legislation through parliament after Theresa May lost her majority in the snap general election she called in June.
On Wednesday Brexit secretary David Davis also told Parliament that no impact assessments on the effect of Brexit on the UK economy had been carried out. This follows calls for Davis to be held in contempt of Parliament for refusing to release the documents – which the government had previously indicated existed. The House of Commons has now ruled the Minister is not in breach of any rules.
Connor Campbell, financial analyst at Spreadex, said: “It hasn’t been a great week for the government, with Brexit bungles galore – take your pick from David Davis’ admission that there hasn’t been any sector-by-sector impact assessment, or the DUP Irish border blockade, or Philip Hammond stating the Cabinet is yet to discuss the ‘end state position’ for the UK after it leaves the EU – undermining the pound.”
The pound will face further pressure over the next two days as the EU’s chief Brexit negotiator Michel Barnier stated on Wednesday that the UK has 48 hours to agree on a potential deal to ensure talks can move on to the next stage.
Concerns over the progress of corporate tax cuts in the US kept dollar gains in check, though, with the greenback easing against the Japanese Yen, to 112.53 yen to the dollar, moving further from Monday’s high of 113.09 – its best level since mid November.
The euro climbed against both the pound and the dollar – up 0.7 per cent to $1.1344 and $1.1790 respectively as Markets anticipate the latest economic growth figures from the bloc, due at 10am GMT.
Third quarter European GDP is widely expected to maintain second quarter levels – up 0.6 percent month on month and 2.5 per cent year on year. In comparison UK GDP between July and September was 0.4 per cent with full year growth expected to come in at 1.5 per cent and decline over the next two years.
In cryptocurrencies, Bitcoin surged to an all time high of $14,570.30 by 9am GMT, driven by the Australian stock exchange’s decision to use blockchain technology – used to create and keep track of Bitcoins – to process trades.
On Thursday the Australian government also announced it will be launching research into potential future business applications of the technology.