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Sterling Falls as Businesses Brace for Brexit

1/2/2019, 6:39:40 PMTrading Strategies
Sterling Falls as Businesses Brace for Brexit

Sterling was lower on Wednesday as worries over Brexit weighed and companies braced for the UK’s departure from the EU in March.

GBP/USD slumped 0.47% to 1.2691 as of 5:35 AM ET (10:35 GMT).

Activity in the UK manufacturing sector jumped to a 6-month high in December, as companies prepare for the uncertainty of a hard Brexit, IHS Markit said in its monthly report.

Prime Minister Theresa May’s Brexit draft deal is expected to come before the British Parliament for a vote before the end of January but questions remain over whether or not it will pass. Government officials remain wary of the European Union’s backstop deal over the Northern Ireland border and have asked for assurance that the deal is temporary.

The euro was also down, with EUR/USD dipping 0.2% to 1.1438.

The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was mostly flat at 95.77 as traders remained cautious over the Sino-U.S. trade war and political instability as the U.S. government remains shut down.

A tweet from U.S. President Donald Trump late on Tuesday suggested he could be open to deal.

“Border Security and the Wall “thing” and Shutdown is not where Nancy Pelosi wanted to start her tenure as Speaker! Let’s make a deal?,” the President said on twitter.

The dollar was down against the safe-heaven Japanese yen, with USD/JPY slumping 0.7% to 108.94.

Elsewhere, NZD/USD decreased 0.12% to 0.6706 while AUD/USD fell 0.5% to 0.7011