MW: Pound hits multiweek lows on fresh Brexit worries, as dollar continues to rise
The British pound tumbled to lows not seen since October on Monday, triggered by fresh worries over a “hard Brexit” and as the dollar’s post-jobs data rally resumed Monday.
The ICE Dollar Index DXY, +0.11% added 0.07% to 102.29, after hitting highs so far in the session of 102.52. The gauge finished Friday’s session at around 102.26. The WSJ Dollar Index BUXX, +0.14% , which compares the buck to a wider basket of currencies than the ICE Dollar Index, rose 0.1% to 92.91, from 92.85 last Friday.
The euro EURUSD, -0.0665% slipped to $1.0525, from $1.0553 late Friday, while sterling GBPUSD, -0.9442% tumbled further to $1.2167, from $1.2270 on Friday. The pound continued to hover near multidecade lows, as it has since the U.K. voted to exit the European Union in June.
On Monday, the pound dropped to a low of $1.2122, the lowest since Oct. 28, 2016, when it hit $1.2112, according to Richard Perry, market analyst at Hantec Markets, in emailed comments.
British Prime Minister Theresa May denied that the government’s approach to Brexit is “muddled” in an interview with Sky News on Sunday. May said she was confident the U.K. could get a good deals on both trade and immigration, but added that the country couldn’t just keep “bits of EU membership.” The remarks were taken as a sign that the U.K. was headed for a hard exit from the EU, in which it severs access for business to the bloc’s single market.
Read: How the pound can find a silver lining in Europe’s 2017 stormclouds
Dollar bolstered by jobs: Data released Friday showed the U.S. added 156,000 jobs in December. Economists had been expecting an increase of 180,000, but the data were still taken as a sign of improving conditions in the labor market and therefore boosted the greenback. The week ahead could prove challenging for continued gains, though, some market watchers said.
Read: December jobs report keeps Fed on track for hikes this year
“I will be happy to buy USDs this week, but the event risk is real, with Janet Yellen speaking on Thursday (along with a number of other Fed speakers this week) and U.S. retail sales the highlight on the economic data front,” said Chris Weston, chief market strategist at IG.
A cluster of Federal Reserve speakers will be heard from this week. Boston Fed President Eric Rosengren appears at 9 a.m. Eastern Time on Monday, and then Atlanta Fed President Dennis Lockhart at 12:40 p.m. Eastern. Among several Fed officials to speak on Thursday will be Chairwoman Janet Yellen. Midweek, investors will get the first press conference from President-elect Donald Trump.
A reading on consumer credit for November is due at 3 p.m. Eastern on Monday.The big economic data comes later in the week, with figures on December retail sales and consumer sentiment on Friday.
Against the yen, the greenback USDJPY, -0.23% was trading at ÂĄ117.37, compared with ÂĄ117.05 late Friday, and trading around levels not seen since February 2016.
Lira battered again: The dollar’s strength was exacerbating weakness for the Turkish lira USDTRY, +2.3465% , which tumbled anew Monday. The lira sank to $3.7333 against the U.S. currency on Monday, hovering at fresh lows, according to FactSet Research.
See: How politics rocked the currency market in 2016
The Turkish lira lost a fifth of its value in 2016, amid political tension in the country and concerns that the policies of President Recep Tayyip Erdogan threaten the independence of the central bank. Terrorist attacks have also made investors nervous about holding the currency.
Erdogan has been urging Turks to help support the lira, by trading in euros and dollar, a policy that hasn’t been working, in the eyes of some:
