FX round-up: Pound dips as Foreign Secretary warns EU against miscalculations
By Alexander Bueso
Date: Monday 23 Jul 2018
(Sharecast News) - Sterling was again on the back foot on Monday, against both the US dollar and the single currency, albeit marginally so.
Versus the Greenback, the pound was down by 0.2% at 1.3105, while against the euro it was slipping 0.05% to 1.1199.
To take note of, speaking from Berlin, the freshly minted Foreign Secretary, Jeremy Hunt, reportedly warned an audience not to risk forcing Britain into a disorderly Brexit by mistake, saying the UK would not "blink".
Beside him was Heiko Maas, his German counterpart, who said Berlin did not want such an outcome, it wanted an agreement.
Nevertheless, the spotlight at the start of the week was on Asia, as the yen shot higher against the US dollar overnight on the back of reports that the Bank of Japan was mulling changes to its monetary policy setting, so as to ease the burden on lenders' profits from longer-term interest rates near 0% and to make policy more sustainable.
By the end of the London session however, dollar/yen was just 0.01% lower to 111.46.
Going the other way, the US dollar tacked on a further 0.43% in its cross with the Chinese yuan, reversing earlier weakness.
The dollar's gains came even as China's foreign ministry said the value of its currency was driven by market forces and that it had no intention of weakening it.
On the previous Friday, US President Donald Trump had accused China and the European Union of manipulating their currencies, in order to weaken them and drive up their exports.
That had forced US Treasury Secretary Steve Mnuchin to come out on Sunday, on the sidelines of the G-20 finance ministers' meeting in Buenos Aires, and say there should be no concern of brewing currency wars.
Be that as it may, the assembled finance ministers failed to agree on a consensus view regarding the multiple ongoing trade spats, issuing a warning instead that global growth, while still strong, was no longer synchronised, even as short to medium-term risks to the outlook were rising due to those trade frictions.
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