Forex

Sterling shines on Brexit hopes, yen eases on trade optimism

Reuters Tokyo | Updated on October 11, 2019 Published on October 11, 2019

Representative image   -  Reuters

The euro also gained against the dollar, rising to $1.1007

Hopes of progress in United States (US)-China trade talks and optimistic comments from Europe on Brexit pushed back the safe-haven yen and lifted the British pound and euro early on Friday.

Sterling was the biggest mover overnight, jumping 2 per cent to a two-week high versus the dollar and posting its largest daily percentage gain in seven months on hopes of a Brexit resolution.

Irish Prime Minister Leo Varadkar said on Thursday a Brexit deal could be clinched by the end of October to allow the United Kingdom to leave the European Union (EU) in an orderly fashion, after what he called a very positive meeting with Boris Johnson.

Ireland is a major factor in the prolonged Brexit impasse.

Sterling last traded at $1.2431, having risen up to $1.2469 on Thursday.

Against the euro, the pound also rose to two-week highs of 0.8831 pound to the euro on Thursday and last stood at 0.8858.

The euro also gained against the dollar, rising to $1.1007 . It had climbed as high as $1.1034 in US trade on Thursday, its strongest in almost three weeks.

That helped to send the dollar index to 98.709, a low last seen on September 25.

Also undermining the dollar, data showed on Thursday US consumer prices were unchanged in September and underlying inflation retreated, supporting expectations the Federal Reserve will cut interest rates in October.

The yen eased to 107.92 yen to the dollar, having shed about 0.45 per cent the previous day.

Top US and Chinese negotiators wrapped up a first day of trade talks in more than two months on Thursday, as business groups expressed optimism the two sides might be able to ease a trade war and delay a US tariff hike scheduled for next week.

US President Donald Trump told reporters that his team had a “very, very good negotiation with China,” and reiterated his plans to meet with Liu at the White House on Friday.

“Prospect of an interim deal were also boosted overnight following reports that President Trump was planning to meet Vice Premier Liu He on Friday,” Rodrigo Catril, senior FX strategist at National Australia Bank in Sydney, said in a report.

The Chinese yuan was also buoyed, with offshore yuan traded at 7.105 yuan per dollar, having hit a three-week high of 7.0990 to the dollar the previous day.

Published on October 11, 2019
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