Pound Falls On U.S. Debt Ceiling, China Concerns
September 29 2021 - 06:08AM
RTTF2
The pound weakened against its major counterparts in the
European session on Wednesday, as U.S. debt-ceiling impasse,
Evergrande's debt crisis and power shortages in China dampened
investor sentiment.
Senate Republicans blocked a House plan to suspend the
government's borrowing limit, in a major blow to Democratic
attempts to avert a possible government shutdown on October 1.
If the debt ceiling is not raised, the U.S. government would
default on its obligations as early as mid-October.
Worries about China Evergrande's debt crisis mounted as it faces
$47.5 million bond interest payment on its 9.5 percent March 2024
dollar bond, after missing payments last week.
The developer is planning to sell a 9.99 billion yuan stake in
Shengjing Bank to settle its financial liabilities with the
bank.
Investors continue to worry about surging energy costs due to
power shortages in China, which is hurting the country's
manufacturing sector and related supply chains.
Data from the Bank of England showed that U.K. mortgage
approvals declined to a 13-month low in August.
Mortgage approvals for house purchases fell to 74,453 in August
from 75,126 in July. This was the lowest since July 2020.
The pound dropped to 1.2514 against the franc, its weakest level
since August 24. If the pound weakens further, 1.235 is possibly
seen as its next support level.
The pound dipped to 1.3444 against the greenback, a level unseen
since December 2020. The pound may challenge support around the
1.33 mark.
The pound hit a 6-day low of 149.92 against the yen, from
Tuesday's close of 150.82. The pound is seen finding support around
the 147.00 region.
The pound declined to its lowest level since July 21 against the
euro, at 0.8657. The next possible support for the currency is seen
around the 0.88 level.
Looking ahead, European Central Bank President Christine
Lagarde, Bank of England Governor Andrew Bailey, Bank of Japan
Governor Haruhiko Kuroda and Federal Reserve Chair Jerome Powell
will participate in a virtual panel discussion titled "Policy
panel" at the ECB Forum on Central Banking at 11:45 am ET.
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