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Monday, 9 July 2018

Dollar loses ground, hit by pound’s jump after Brexit official’s exit


The dollar was losing ground against its main rivals Monday, weighed down in part by the pound’s leap following the resignation of U.K. Brexit Secretary David Davis.
The ICE U.S. Dollar index DXY, -0.13% , which measures the buck against six other currencies, dropped to 93.827, down from 94.012 late Friday in New York.
The gauge lost ground Friday, as investors assessed a stronger-than-expected U.S. jobs report, as well as moves by the Trump administration and China to officially impose import tariffs. The gauge is down about 0.8% in July, cutting its year-to-date gain to 1.9%.
 The pound GBPUSD, +0.3387% was recently changing hands at $1.3328, up from $1.3287 late Friday in New York. Sterling pushed higher even as Davis on Sunday night unexpectedly stepped down from his post as head Brexit negotiator for the U.K. Britain’s Prime Minister Theresa May on Friday had appeared to unite warring factions of her cabinet behind a new Brexit plan, which calls for a U.K.-EU free-trade area for goods but British autonomy over regulation for many services.
The British currency may have been drawing buyers thanks to comments from Davis, in which he suggested Prime Minister Theresa May ought to hold on to her job.
“Initially, the news of Mr. Davis’s departure caused a sell-off in cable on fears of a euro-skeptic revolt against the PM that could lead to a no-confidence vote and a snap election,” said Boris Schlossberg, managing director of foreign-exchange strategy at BK Asset Management, in a note Monday.
“However, Mr. Davis noted that he would not stand to challenge PM May, and the market quickly realized that the exit of hard-line Brexiteers could actually strengthen Ms. May’s ‘soft-Brexit’ strategy.”
The U.K. government on Monday named Dominic Raab, a former housing minister, as Davis’s successor. 

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