Battered pound bounces back from 2-month low | Reuters
By Jemima Kelly and Patrick Graham | LONDON LONDON Britain's battered pound recovered half a percent against the dollar on Wednesday, propped up by corporate demand as investors looked for bargains after it hit two-month lows the previous day. The pound has lost almost a fifth of its value versus the greenback since last June's vote to leave the European Union, with currency traders concerned that the foreign flows of capital that Britain relies on just to fund its gaping current account deficit will dry up.
By Jemima Kelly and Patrick Graham
LONDON Britain's battered pound recovered half a percent against the dollar on Wednesday, propped up by corporate demand as investors looked for bargains after it hit two-month lows the previous day. The pound has lost almost a fifth of its value versus the greenback since last June's vote to leave the European Union, with currency traders concerned that the foreign flows of capital that Britain relies on just to fund its gaping current account deficit will dry up. It skidded to as little as $1.2110 on Tuesday, its lowest since Jan. 17, hit by fears of prolonged political jousting over the terms of Brexit.But it bounced back to as high as $1.2258 in early trading in Europe on Wednesday, before easing off to trade at $1.2217 by 1620 GMT, still up half a percent on the day. Against the euro, sterling climbed 0.3 percent to hit 87.02 pence.
"There is uncertainty out there about how much of the Brexit effect is priced in – clearly we’ve had huge movements in sterling since June and when we do see these sharp falls there are people around looking for bargains," said Rabobank currency strategist Jane Foley.Dealers said orders had been pushed through at the start of European trade, before labour market data at 0930 GMT. But sterling more than halved those gains in the hour after the numbers, which showed a dip in wages growth. Traders said it looked as if there had been a build up of corporate demand for sterling between $1.2150 and $1.22 that blocked further falls.
Most analysts say that the roughly 20 percent fall against the dollar and 13 percent loss against the euro since the Brexit vote has left sterling looking undervalued from a longer-term perspective. But a number of leading banks have also forecast it to fall further as negotiations on the terms of Britain's exit from the EU begin in the weeks ahead.
The pound's fall to its lowest since mid-January on Tuesday came after Prime Minister Theresa May won the last of the votes in parliament required to start the Brexit process."With the ongoing Brexit woes effectively strengthening the relationship between uncertainty and sterling, further downside losses should be expected," wrote FXTM Research Analyst Lukman Otunuga.Sterling inched up about 10 ticks in afternoon trading in Europe, after a Survation poll found a majority of voters still oppose Scottish independence and believe that a second referendum on the issue should not be held before Britain leaves the European Union."Perhaps for international investors who don't have a real handle on these issues, you could imagine there was relief that those who want to leave are in the minority still, even if it's close," said Foley. (Editing by Ken Ferris)
This story has not been edited by Firstpost staff and is generated by auto-feed.
By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States
BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.