FX round-up: Sterling endures torrid Friday as traders head for safe-haven gold
By Andrew Schonberg
Date: Friday 24 Feb 2017
(ShareCast News) - Sterling had a torrid time on key crosses Friday with traders buying defensive assets such as gold on concerns about Europe's political unease, and worries about the economic impact of Brexit.
By 17:22 GMT, sterling had fallen 0.52% to $1.2491, and dropped 0.6% to €1.1794. The dollar-spot index was down a milder 0.12% to $101.930.
"It's rare to see the FTSE and pound moving in the same direction these days, suggesting a rather sharp shift in sentiment this Friday," said Spreadex financial analyst Connor Campbell.
Both the FTSE 100 and FTSE 250 ended Friday lower, with key equities indices on Wall St and in Europe also southbound. Gold was up 0.49% to $1257.5 an ounce.
SwissQuote said the cable was lying below strong resistance at $1.2771, with key support found at $1.2254. "The long-term technical pattern is even more negative since the Brexit vote has paved the way for further decline," it said.
The British currency was also down against the commodity-backed issues of Australia, Canada, New Zealand and South Africa, and softened against Japan's yen.
The dollar, meantime, eked out mild gains on the aussie, kiwi and yen, but was mildly lower versus the euro, loonie and yen.
Michael Hewson, chief market analyst at CMC Markets UK, said the greenback had struggled to retain its gains this week, under pressure thanks to a decline in gilt yields.
"Doubts about the timing of the next US Federal Reserve rate rise are starting to see some slippage away from March," he said. The market is already mulling the possibility of a May rise by the Fed, or potentially even later in the year.
Hewson added that gold was a beneficiary Friday thanks to the transatlantic political and economic landscape.
"Falling yields in the US, and political risk in Europe drives risk aversion flows into the safe-haven asset," he said.
"It would appear that the receding prospects of an imminent large scale fiscal stimulus after yesterday's comments from US Treasury Secretary Steve Mnuchin appears to have prompted some short-term US dollar weakness."
FXTM research analyst Lukman Otunuga added that the dollar had lost its attitude this week after the Fed minutes failed to convince participants of a March rate hike.
"Uncertainty originating from the Trump developments has fuelled the Greenback selloff."
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