Pound Declines As EU Drafts Plan For N.Ireland Control
February 28 2018 - 4:43AM
RTTF2
The pound dropped against its major opponents in the European
session on Wednesday amid uncertainty around Brexit negotiations,
after the European Union suggested to keep Northern Ireland inside
the customs union if a solution to the border dispute cannot be
found.
The draft document, published by the EU, proposed a "common
regulatory area" on the island of Ireland after Brexit, unless a
solution is found.
"The common regulatory area shall constitute an area without
internal borders in which the free movement of goods is ensured and
North-South cooperation protected," the draft document showed.
The EU said that the transition period will end on December 31,
2020, rejecting U.K. demand to extend it to finalize key
issues.
The U.K. Prime Minister Theresa May said no government could
ever agree to the draft treaty and she is committed to protect the
integrity of the UK.
"The draft legal text the commission have published would, if
implemented, undermine the UK common market and threaten the
constitutional integrity of the UK by creating a customs and
regulatory border down the Irish Sea, and no UK prime minster could
ever agree to it," she said.
The currency held steady against its major rivals in the Asian
session, with the exception of the yen.
The pound fell to a 6-day low of 0.8847 against the euro, from a
2-day high of 0.8779 hit at 4:45 am ET. If the pound falls further,
it may find support around the 0.90 mark.
Flash data from Eurostat showed that Eurozone inflation slowed
slightly in February on food and energy prices.
Inflation eased to 1.2 percent from 1.3 percent in January. The
rate came in line with expectations.
The pound dropped to 1.3807 against the greenback, its lowest
since February 14. The next possible downside target for the pound
is seen around the 1.37 level.
The pound weakened to a 3-month low of 147.67 against the yen,
after advancing to 149.52 at 7:15 pm ET. The pound is likely to
find support around the 144.5 level.
Data from the Ministry of Land, Infrastructure, Transport and
Tourism showed that Japan's housing starts logged a double-digit
decline at the start of the year.
Housing starts decreased 13.2 percent year-on-year in January,
faster than the 2.1 percent drop in December and the expected 4.7
percent decrease.
Following a 2-day high of 1.3117 hit at 4:45 am ET, the pound
declined to a 5-day low of 1.3018 against the Swiss franc. On the
downside, 1.29 is seen as the next support level for the pound.
Survey results by the KOF Economic Institute showed that a
measure of the upcoming trends in the Swiss economy unexpectedly
climbed in February, thus stabilizing at a level above its
long-term average.
The Swiss KOF Economic Barometer rose to 108 from 107.6 in
January, which was revised from 106.9. Economists had forecast the
score to ease for a second straight month to 106.
Looking ahead, U.S. pending home sales for January are scheduled
for release shortly.
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