Pound Falls As Scottish Parliament Votes On Second Independence Referendum
March 22 2017 - 6:34AM
RTTF2
The pound slipped against its major counterparts in the New York
session on Wednesday, as the Scottish lawmakers are voting on a
demand for second independence referendum, with the chamber set to
back First Minister Nicola Sturgeon's proposal amid resistance from
the U.K.
Members of the Scottish Parliament began a two-day debate on
Tuesday, with a vote due today.
On Tuesday, Nicola Sturgeon warned that it would be wrong and
unacceptable for the UK government to stand as a hindrance to the
outcome of vote in the Scottish Parliament.
Sturgeon wants the referendum to held between autumn 2018 and
spring 2019 when the terms of the U.K.'s exit from European Union
are clear.
With the U.K. set to trigger Article 50 of the Lisbon treaty
next week, investors are worried over the disagreement between the
nation and the EU of the financial commitments that could serve as
a stumbling block for post-Brexit trade talks.
Investor sentiment dampened on growing uncertainty over the
implementation of U.S. President Donald Trump's policy agenda, as
the country's health care reform bill struggles to gain support
from House conservatives and Senate Republicans ahead of an
anticipated vote on Thursday.
Trump has suggested the GOP cannot move forward with tax reform
plans until lawmakers keep the promise to repeal and replace
Obamacare.
Data published by the Bank of England showed that moderate rates
of activity growth in the UK had continued overall.
Growth is forecast to slow further during the year ahead as the
fall in sterling fed through to higher prices, reducing households'
purchasing power, according to Agent's summary of business
conditions. On the other hand, export volume growth had picked
up.
The currency retreated from early highs against its major
counterparts in the European session.
The pound dropped to 1.2431 against the greenback, reversing
from an early multi-week high of 1.2506. If the pound-greenback
pair extends side, 1.23 is possibly seen as its next support
level.
The pound weakened to 137.96 against the yen, its weakest since
January 17. Continuation of the pound's downtrend may see it
challenging support around the 136.00 region.
The minutes from the Bank of Japan's monetary policy meeting on
January 30 and 31 revealed that board members stated the country's
economic recovery is continuing at a moderate pace.
"Exports had picked up, mainly led by automobile-related exports
to advanced economies and IT-related ones to emerging economies in
Asia, with the effects of the slowdown in emerging economies
diminishing. They would likely continue their pick-up trend for the
time being," the minutes said.
The pound reversed from an early high of 1.2414 against the
franc, dropping to a 2-day low of 1.2316. The pound is seen finding
support around the 1.22 mark.
The pound, having advanced to more than a 2-week high of 0.8643
against the euro at 4:40 am ET, reversed direction and dropped to
0.8690. The next possible support for the pound may be seen around
the 0.88 area.
Data from the European Central Bank showed that the euro area
current account surplus declined to a 15-month low in January.
The current account surplus fell to EUR 24.1 billion in January
from EUR 30.8 billion in December. This was the lowest since
October 2015, when the surplus totaled EUR 23.4 billion.
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