POUND FALLS AMID RISK AVERSION

Money - budget 2

BRUSSELS (Alliance News) – The pound slipped against its major counterparts in the early European session on Thursday, as European shares declined in thin pre-holiday trading, tracking losses in Asia and Wall Street.

Worries over Italian banks and lower commodity prices induced some caution among traders in the run-up to the Christmas weekend.

The focus remains on the US economy, with reports on revised GDP for July-September, durable goods orders, initial jobless claims, personal income and spending slated for release later in the day.

Meanwhile, oil prices recovered, after finishing sharply lower on Wednesday as the EIA report showed an unexpected build in US oil inventories and Libya said it expects to boost production over the next few months

In economic news, the latest growth indicator from the Confederation of British Industry showed that the UK private sector growth picked up pace in the fourth quarter.

The growth indicator climbed to +17%, the highest in a year, when it reached 20% in December 2015.

Survey from GfK showed that UK consumer confidence was marginally better in December, with an index score of -7.

That beat forecasts for -8, which would have been unchanged from the previous month; however, the negative score shows that pessimists continue to outnumber optimists.

The currency showed mixed performance in the Asian session. While the pound rose against the yen and the greenback, it dropped against the franc and the euro.

The pound depreciated to a 2-week low of 0.8468 against the euro, compared to 0.8437 hit late New York Wednesday. The pound is likely to find support around the 0.86 mark.

Data from Destatis showed that German import prices increased for the first time in four years in November.

Import prices grew 0.3% in November from prior year, which was the first increase since November 2012. Prices had decreased 0.6% in October and 1.8% in September.

Pulling away from an early high of 1.2378 against the greenback, the pound edged down to 1.2335. On the downside, 1.22 is possibly seen as the next support level for the pound.

The pound eased back to 1.2644 against the Swiss franc, edging closer to pierce its early new 3-week low of 1.2643. The pound is seen finding support around the 1.22 level.

The pound reversed from an early high of 145.58 against the yen, with the pair trading lower at 145.17. The next possible support for the pound-yen pair is likely seen around the 142.5 area.

Looking ahead, US final GDP data for the third quarter, durable goods orders, personal income and spending and leading indicators – all for November, weekly jobless claims for the week ended December 17 and housing data for October, as well as Canada consumer price inflation for November and retail sales for October are set for release in the New York session.

Copyright RTT News/dpa-AFX

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