Reuters, Singapore :
European Union`s chief Brexit negotiator Michel Barnier delivers a statement after Britain`s prime minister Theresa May`s cabinet meeting, in Brussels, Belgium, on 14 November 2018. Photo: ReutersThe dollar weakened on Thursday against the pound and euro, which rose after Britain’s prime minister won cabinet approval for her draft Brexit plan, but gains were capped by concerns over whether that plan will win parliamentary approval.
Prime minister Theresa May won the backing of her senior ministers for a European Union divorce deal on Wednesday, pushing the euro and sterling up 0.8 per cent and 1.2 per cent against the dollar, respectively, from their intraday lows hit on Monday.
The draft divorce deal with the European Union struck on Tuesday would allow the United Kingdom to leave the EU with a deal that avoids a chaotic “hard Brexit” departure. But EU chief negotiator Michel Barnier cautioned that the road to ensuring a smooth UK exit was still long and potentially difficult.
The dollar index, a gauge of the currency’s performance against six major peers, ticked up slightly to 96.87, but remained off a 16-month high hit on Monday.
The recent correction in the dollar index has been due to rallies in the euro and sterling, which together constitute around 70 per cent of the weight in the index.
Despite their outperformance over the dollar on Thursday, analysts still see firm support for the safe haven greenback amid broader concerns about Brexit and global trade tensions.
Sterling gained 0.06 per cent versus the dollar, changing hands at $1.3002.
“Getting the draft approved by the parliament will be extremely challenging and that’s why we are seeing sterling gains capped at 1.3,” said Ray Attrill, head of currency strategy at National Australia Bank.
He said the dollar’s fundamentals remain strong, backed by a robust US economy and rising wage pressures which will keep the Federal Reserve on track for further rate rises.
“A rate hike in December is fully priced in and the next lift-off in rates will most likely be in March next year, which is likely to support the dollar,” said Attrill.
European Union`s chief Brexit negotiator Michel Barnier delivers a statement after Britain`s prime minister Theresa May`s cabinet meeting, in Brussels, Belgium, on 14 November 2018. Photo: ReutersThe dollar weakened on Thursday against the pound and euro, which rose after Britain’s prime minister won cabinet approval for her draft Brexit plan, but gains were capped by concerns over whether that plan will win parliamentary approval.
Prime minister Theresa May won the backing of her senior ministers for a European Union divorce deal on Wednesday, pushing the euro and sterling up 0.8 per cent and 1.2 per cent against the dollar, respectively, from their intraday lows hit on Monday.
The draft divorce deal with the European Union struck on Tuesday would allow the United Kingdom to leave the EU with a deal that avoids a chaotic “hard Brexit” departure. But EU chief negotiator Michel Barnier cautioned that the road to ensuring a smooth UK exit was still long and potentially difficult.
The dollar index, a gauge of the currency’s performance against six major peers, ticked up slightly to 96.87, but remained off a 16-month high hit on Monday.
The recent correction in the dollar index has been due to rallies in the euro and sterling, which together constitute around 70 per cent of the weight in the index.
Despite their outperformance over the dollar on Thursday, analysts still see firm support for the safe haven greenback amid broader concerns about Brexit and global trade tensions.
Sterling gained 0.06 per cent versus the dollar, changing hands at $1.3002.
“Getting the draft approved by the parliament will be extremely challenging and that’s why we are seeing sterling gains capped at 1.3,” said Ray Attrill, head of currency strategy at National Australia Bank.
He said the dollar’s fundamentals remain strong, backed by a robust US economy and rising wage pressures which will keep the Federal Reserve on track for further rate rises.
“A rate hike in December is fully priced in and the next lift-off in rates will most likely be in March next year, which is likely to support the dollar,” said Attrill.
