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Forex - Dollar Extends Losses as Pound Rally Continues

Published 11/01/2018, 11:10 AM
Updated 11/01/2018, 11:10 AM
© Reuters.  The dollar extended losses. - The dollar extended losses against a currency basket on Thursday as a rally in the pound continued on the back of hopes that the UK and the European Union are making progress in Brexit talks.

The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was down 0.81% to 96.12 by 10:53 AM ET (14:53 GMT) after gaining 2.3% in October.

Sterling built on early gains, with GBP/USD up 1.46% to 1.2950.

The pound was bolstered by reports that the UK and the EU are close to a deal that will allow UK financial services companies based in the UK to have continued access to European markets after Brexit, although reports were played down in London and Brussels.

Sterling received an additional boost after the Bank of England indicated that there are scenarios where interest rates could still need to rise in the event of a no-deal Brexit.

The BoE left interest rates on hold in a unanimous decision earlier Thursday and warned that uncertainty over Brexit is weighing on the economy.

The euro was sharply lower against the pound, with EUR/GBP down 0.77% to 0.8809.

Against the dollar, the euro advanced, with EUR/USD changing hands at 1.1403, up 0.81% for the day.

The dollar showed little reaction to U.S. economic reports showing that the labor market is continuing to tighten, but manufacturing activity slowed in October.

The Department of Labor reported that applications for initial jobless claims fell last week, while the number of people receiving benefits was the lowest in more than 45 years.

Another report from the Institute of Supply Management showed that its index of national factory activity fell to 57.7 last month from 59.8 in September.

The dollar was lower against the yen, with USD/JPY losing 0.24% to trade at 112.65.

Meanwhile, U.S. President Donald Trump said in a tweet that he had a "very good" talk with Chinese President Xi Jinping on trade and North Korea and that the two planned to meet at the upcoming G-20 summit.

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