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Forex - Pound Falls Below $1.29 for First Time in a Year
The pound fell below $1.29 for the first time since August 2017 on Wednesday, amid worries that the UK would not be able to reach a deal with the European Union before exiting the bloc in March of next year.
At 6:05 AM ET (10:06 GMT), GBP/USD fell 0.27% to 1.2903, recovering the 1.29 handle after hitting an intraday low of 128.93.
Sterling also weakened against the euro, hitting its lowest level since November. EUR/GBP was last up 0.28% at 0.8986, not far from an intraday high of 0.8992.
The pound has been under pressure this week as British trade secretary Liam Fox claimed that UK was likely to leave the EU without a deal, stoking worries that trade chaos would harm the British economy.
Cable’s strength occurred on Wednesday despite little movement seen in the dollar against major rivals.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was little changed at 95.03.
Investors had been investing in the dollar as a safe haven asset while trade tensions between China and the U.S. continued to mount.
The U.S. Trade Representative's office said late on Tuesday that the U.S. would begin collecting 25% tariffs on another $16 billion of goods it imports from China later this month.
The move is the latest by Washington to pressure China into negotiating trade concessions after it imposed tariffs on $34 billion of goods in July, prompting pledges from China to retaliate.
However, analysts pointed to China’s strong trade data released early on Tuesday, suggesting the world’s second largest economy had yet to be derailed by the tit-for-tat.
Chinese exports jumped 12.2% in July, while imports surged 27.3%, beating expectations and providing some calm despite the fact the first round of U.S. tariffs were implemented last month.
Contrary to its trade against the pound, the dollar was weaker against the yen, with USD/JPY losing 0.42% to trade at 110.92 ahead of expected bilateral trade talks between the U.S. and Japan in Washington on Thursday.
