FOREX-Pound frail on Brexit fears, dollar steady

By Kitco News / August 06, 2018 / www.kitco.com / Article Link

* Pound pressured by worries of possible 'hard' Brexit
* Dollar supported by festering international trade tensions
* Turkish lira firms from record-low hit overnight

By Daniel Leussink

TOKYO, Aug 7 (Reuters) - The pound remained weak on Tuesdayafter dropping to an 11-month low against the dollar overnighton worries over a 'hard' Brexit from the European Union, whilesimmering U.S.-China trade tensions helped support thegreenback.

Comments from officials about a no-deal Brexit stoked fearsBritain would crash out of the EU next year without securing atrade agreement. Sterling sank as far as $1.2920 overnight, itslowest since early-September last year, before making up somelosses. It last stood at $1.2946.

The dollar index against a broad basket of currenciestraded at 95.345 on Tuesday, not far from a more-than-one-yearhigh of 95.652 reached on July 19.

Some analysts see trade tensions supporting the U.S. dollaras the nation's economy is better placed to handle protectionismthan emerging markets, and as tariffs may narrow the U.S. tradedeficit.

"There is still a lot of uncertainty on the tariffs. Wedon't know exactly how much will be implemented and how bad itcan get," said Shinichiro Kadota, senior FX and rates strategistat Barclays in Tokyo.

"If U.S. economic growth starts to slow down because oftariffs or because past tax-cut effects are waning, then I thinkthe economic performance could fade, which could also lead tofading dollar strength."

The euro stayed fragile after dipping to a five-week low of$1.1530 overnight, as German industrial orders fell morethan expected in June, posting their steepest monthly drop inwell over a year. It last traded a touch higher at $1.1558.

The dollar edged down 0.1 percent to 111.30 yen afterticking up slightly overnight.

The Turkish lira firmed against the dollar after broadcasterCNN Turk, citing diplomatic sources, reported that a delegationof Turkish officials will head to Washington in two days todiscuss an ongoing row between the two NATO allies. The currency was trading at 5.2630 against thedollar at 0015 GMT on Tuesday.

It had plunged about 5.5 percent to a record low of 5.4250overnight after the Trump administration announced late onFriday that it was reviewing Turkey's duty-free access to U.S.markets. (Editing by Joseph Radford)

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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