US Markets

Pound pauses for breath on Brexit limbo, dollar stable


The British pound stabilised on Thursday as the Brexit project entered a fresh holding pattern, while the dollar held firm as traders took a breather from Sino-U.S. trade headlines.

By Tom Westbrook

HONG KONG, Oct 24 (Reuters) - The British pound stabilised on Thursday as the Brexit project entered a fresh holding pattern, while the dollar held firm as traders took a breather from Sino-U.S. trade headlines.

Currency markets are also sticking to tight ranges ahead of key central bank meetings this week and next with the euro zone, Japan and United States due to review policy.

Sterling GBP=D3 held at $1.2911 after Britain's parliament backed a withdrawal deal, but rejected the government's tight timetable, while European Union members delayed deciding whether to grant a three-month extension to the Oct. 31 leaving date.

The pound has soared 6% in two weeks of volatile trade since British Prime Minister Boris Johnson flagged and then clinched a deal with the EU on the terms of Britain's exit from the bloc.

"Sterling remains at the centre of the focus for forex markets," said Michael McCarthy, chief market strategist at brokerage CMC Markets in Sydney.

"It looks like traders are weighing up the current parliamentary shenanigans versus the seeming inevitability of a Brexit," he said.

Commonwealth Bank of Australia analysts reckon the pound will stay rangebound between $1.3000 and $1.2800 until things become clearer. McCarthy added that other majors were stable without much news to move the greenback.

"With trade negotiations now moving out of the headlines, there doesn't seem much to spur the dollar in either direction," he said.

Positive comments from U.S. and Chinese leaders earlier in the week about progress negotiating a truce in a their trade dispute had rallied trade-exposed currencies.

That has begun to run out of steam as concerns about the health of the U.S. economy returned to the fore.

Tech industry bellwether Texas Instruments TXN.O posted a disappointing earnings outlook on Tuesday, followed overnight by signs of a slowdown in Microsoft Corp's MSFT.O cloud computing division.

The dollar was steady in Asian trade, gaining marginally against the Australian and New Zealand dollars, slipping marginally against the euro and Japanese yen.

Against a basket of currencies .DXY the dollar was flat at 97.459.

It stood at 108.65 yen JPY=, and drifted higher from a five-week low touched against the kiwi on Tuesday, with the New Zealand dollar buying $0.6420 NZD=D3. The Australian dollar bought $0.6851 AUD=D3.

The Chinese yuan was flat at 7.0623 in offshore trade CNH=.

The euro held at $1.1132 with traders looking to euro zone manufacturing and services data and the outcome of a European Central Bank meeting, both due later on Thursday.

"Small improvements across France, Germany and pan-Eurozone and for both manufacturing, services and composite readings are the consensus expectation," National Australia Bank's Head of FX Strategy, Ray Attrill, said in a note.

"EUR will be sensitive to deviations one side or the other of this."

The ECB is all but certain to leave policy unchanged on Thursday, six weeks after unveiling a package including new asset purchases worth 20 billion euros a month, a rate cut and a pledge to open the money taps further if needed.

Crypto-currency bitcoin BTC=BTSP plunged as far as 11% overnight to a 5-month low of $7,258.00 after Facebook CEO Mark Zuckerberg sounded downbeat about the prospect of Facebook's crypto project, Libra.

(Reporting by Tom Westbrook; Editing by Sam Holmes)

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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