Home Forex News FOREX-Pound Dogged by Brexit Worries, Yen Looks to Abe Successor Vote

FOREX-Pound Dogged by Brexit Worries, Yen Looks to Abe Successor Vote

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Nasdaq surges on tech boost
  • The British pound at a 1/2-month low 
  • Yen looks to politics as Suga set to succeed Abe 
  • Dollar under tension in front of Fed policy declaration on Wed 

TOKYO, Sept 14 (Reuters) – The British pound played with a 1/2-month low against the dollar on Monday on fears about no-deal Brexit while investors waited for Japan’s ruling party to choose a successor to Prime Minister Shinzo Abe. 

The British pound ticked up in Asia to $1.2819, after having hit $1.2767 on Friday, its lowest level since July 24. It has lost over 4% so far this month, the worst among G10 currencies.

Against the euro, it slid to a 5 1/2-month low of 92.90 pence per euro and last remained at 92.39. 

The pound was under pressure from fears that Britain will end its post-Brexit progress period with no trade agreements.

London clearly recognized a week ago that it could violate international law by disregarding a few pieces of its European Union divorce treaty, prompting a fast reproach from the EU’s CEO. 

Previous British prime ministers Tony Blair and John Major said on Sunday Britain must drop a “shocking” plan to pass legislation that breaks its divorce treaty with the European Union, in a breach of international law.

The dollar remained at 106.13 yen, stuck in its familiar territory in recent weeks. 

Japanese Chief Cabinet Secretary Yoshihide Suga is ready to become top of Japan’s ruling party on Monday and prime minister on Wednesday, succeeding Shinzo Abe, the country’s longest-serving leader.

Since Suga has long been a loyal aide to Abe and has promised to proceed with his policies, not many market players anticipate radical changes. 

Minori Uchida, chief FX strategist at MUFG Bank  said: “The focus is on the line-up of his cabinet as well as whether he will call a snap election.” He also added that “he is saying he will continue and advance Abenomics but it is questionable how much advancement he can make.”

The euro held firm following three straight day periods of gains at $1.18455. 

The regular currency was upheld after the European Central Bank gave no clear indication of stemming the single currency’s appreciation. 

In any case, it faces an uphill battle in handling the $1.20 hindrance, with investors wary Eurozone policymakers might not have any desire to see the currency strengthen much beyond that level.

Some Eurozone countries, just like France and Spain, are reporting ascents in COVID infections, as opposed to their falls in the United States, blurring the outlook for economic recovery.

The dollar’s index against a basket of currencies stood minimally changed at 93.317, with a focus around the Federal Reserve’s policy announcement on Wednesday. 

Expectations of further monetary easing by the Fed have been a delay on the dollar. The dollar index has lost over 4% so far this quarter. 

The Fed declared last month that it adjusted its policy strategy, noting that it needs inflation to average 2% after some time. 

Yet, a few analysts stated that markets may have gone excessively far in expecting further Fed stimulus.

New York-based strategists at Standard Chartered Bank wrote in a report that “having set aside yield curve control (YCC) as a near-term policy option, the FOMC does not seem to have an operational consensus on how to use the balance sheet,” also indicated that “This may disappoint investors.” 

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