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Sterling slid to a nine-month low against the euro on Wednesday as investors sold the currency fearing Britain could soon leave the European Union without securing a trade deal.
Sterling has slumped recently due to traders hedging against what they see as the growing chances of the currency plummeting if Britain crashes out of Europe in less than eight months’ time.
The pound sank to an 11-month low versus the dollar on Monday after Britain’s trade minister Liam Fox suggested the UK could leave the EU in March without an agreement to ensure future relations with the bloc, its biggest trading partner.
“A lot of companies can’t wait for the negotiations outcome in October so a lot of course are trying to hedge against drop in the pound,” said Christophe Barraud, an economist at Market Securities brokerage in Paris.
Sharp rises in the euro and the dollar recently have exacerbated the pound’s woes. Sterling fell 0.2 per cent to as low as 89.84 pence, its weakest since the middle of November.
The pound also slipped to a fresh 11-month low against the dollar of $1.2912, falling below Monday’s low of $1.2920. British Prime Minister Theresa May will meet with fellow EU leaders in October to try to seal deals on the terms of Britain’s withdrawal. “We remain bearish on the pound in the short term until the Brexit mess is out the way and look for the currency to enter a $1.27-1.28 range before the leaders summit,” said Nomura strategist Jordan Rochester.
The pound has fallen more than 10 per cent since mid-April, and with the government yet to agree a divorce deal with Brussels, currency traders are growing edgy about its outlook.
Traders are now preparing for Friday’s reading of second-quarter British economic growth numbers for clues as to where sterling is headed next.
Emerging markets will likely be beholden this week to a series of key decisions in the US. Top of the list is an announcement due as early as Monday on whether the US Treasury will name China a curre
Turkey’s lira and stocks rose on Monday on hopes of a thaw in relations between Ankara and Washington while a late rally last week on Wall Street offered little respite for other emerging market stoc
The Gulf Today
Sterling hit a new 3-1/2 month high versus the euro and added to gains against the dollar on Wednesday on optimism that Britain and the European Union can agree a Brexit deal soon.
The Indian rupee plummeted further against the UAE dirham as the US dollar strengthened on Thursday.
As of 8:31 am, the Asian currency stood at 20.25 against the dirham and 74.4 against th
The Pakistani rupee plunged about 8 per cent on Tuesday in an apparent central bank devaluation, while the stock market snapped a six-day skid after the government said it plans to seek a bailout fro