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Sterling slumps to fresh 2-month lows amid Brexit anxiety

ForexDec 28, 2016 07:55AM ET
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© Reuters. Sterling hits 2-month lows against the dollar

Investing.com - The British pound fell to a fresh two-month low against the dollar in holiday-thinned trade on Wednesday, amid renewed uncertainty over the process by which Britain will leave the European Union.

Sterling fell to a session low of 1.2208 against the greenback, a level not seen since November 1. The pair was last at 1.2222 by 7:55AM ET (12:55GMT), down around 0.4% on the day.

The pound has been under pressure in recent sessions amid concerns that Theresa May's government will struggle to negotiate a satisfactory trade deal with the European Union once Brexit is officially completed early next year.

Meanwhile, the greenback remained well-supported after previous day's data showed U.S. consumer confidence hitting its highest level in more than 15 years in December, in addition to robust housing numbers.

The upbeat reports helped underscore expectations that the Federal Reserve would raise interest rates at a faster pace next year.

Since the U.S. election in early November, the dollar has rallied by almost 6% thanks to bets of higher U.S. growth and a faster pace of interest rate increases under incoming president Donald Trump.

The Fed hiked interest rates for the first time in a year earlier this month and projected three more increases in 2017.

Higher rates boost the dollar by making the currency more attractive to yield-seeking investors.

The National Association of Realtors is to release data on November pending home sales at 10:00AM ET (15:00GMT) on Wednesday. The report is expected to show pending home sales rose 0.5% last month, after inching up 0.1% in October.

Sterling slumps to fresh 2-month lows amid Brexit anxiety

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