FX round-up: Early gains in Sterling peter out, euro weakness in focus
By Alexander Bueso
Date: Monday 04 Mar 2019
(Sharecast News) - Sterling finished the session little changed as traders continued trying to anticipate what the end-game of the whole Bexit process would end up being.
Stoking some buying interest early in the session was news that Conservative party grandee Graham Brady was ready to drop his opposition to Theresa May's Brexit deal.
The calculus of some market observers was that the risk of an even softer version of Brexit materialising if the Prime Minister lost the vote in Parliament on her proposal might focus minds even among the most recalcitrant Brexiters.
Providing a further boost to the pound, at the weekend, US President Donald Trump criticised Federal Reserve chairman, Jerome Powell.
"We have a gentleman that likes a very strong dollar at the Fed," Trump said.
"I want a strong dollar, but I want a dollar that is great for our country not a dollar that is so strong that it is prohibitive for us to be dealing with other nations."
Combined, the above saw the pound hit an intraday high versus the single currency at 1.1685, but by 2116 GMT it was just 0.02% higher to 1.1620.
By the end of the day cable had also moved lower, giving up 0.17% to close at 1.3180, with dollar/yen off by 0.14% to 111.73.
Nevertheless, the euro was in fact conspicuously weak against the Greenback throughout most of the session, hitting an intraday low of 1.1309 late in the session.
Possibly linked to the above, in remarks to Bloomberg, Eurizon SLJ Capital boss, Stephen Jen, said that if the stress originating from China bled further into the European economy, keeping the European Central Bank from normalising monetary policy, then euro/dollar might fall to 1.05 later in 2019.
On that note, in comments sent to clients, analysts at Barclays Research pointed to recent weak readings on the euro area's credit metrics, arguing that they further augmented the case for the ECB not to delay a fresh round of loans for the bloc's banking sector past June.
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