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Forex - Pound Hit by Brexit Deal Doubts, Yen Moves Higher

Published 10/15/2018, 04:50 AM
© Reuters.  Pound hit by Brexit deal doubts, yen moves higher
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Investing.com - The pound was pressured lower on Monday as talks aimed at reaching a Brexit deal ended in a stalemate, while the safe haven yen strengthened as equity markets started the week lower amid ongoing concerns over rising U.S. yields and trade tensions.

GBP/USD was down 0.28% to 1.3119 by 04:49 AM ET (08:49 AM GMT), while EUR/GBP was up 0.2% to 0.8810.

The pound came under pressure after talks between Britain’s Brexit Secretary Dominic Raab and the European Union’s chief Brexit negotiator Michel Barnier ended in a stand-off ahead of Wednesday’s EU leaders summit.

The lack of progress towards a Brexit deal added to a cocktail of geopolitical risks weighing on market sentiment.

Markets were watching developments in the euro zone, where Italy’s government was expected to approve its new budget, despite criticism from Brussels that it will breach EU fiscal rules.

A Bavarian state parliament election on Saturday saw the ruling Christian Social Union party lose its majority, in a blow to German Chancellor Angela Merkel’s government.

Meanwhile, oil prices were pushed higher by rising diplomatic tensions between Saudi Arabia and the West over the disappearance of a journalist.

Global equity markets failed to rebound on Monday, despite Friday’s gains on Wall Street after a sharp selloff last week triggered by worries over rising U.S. yields and concerns that trade wars are starting to act as a drag on global growth.

The safe haven yen gained ground, with USD/JPY down 0.45% to 111.70.

The Swiss franc, also sought as a refuge in times of market turmoil, was higher against the dollar with USD/CHF down 0.3% to 0.9900.

The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, dipped 0.08% to 94.86.

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