Pound Falls On Risk Aversion The pound declined against other major currencies in European deals on Wednesday, as European stocks traded in a negative territory. Concerns over Chinas economic growth as well as ongoing problems in Ukraine pressured stocks and riskier assets in European deals. Worries about the state of Chinese demand put pressure industrial commodities, particularly copper and iron ore. Investors look ahead to data out of China on industrial production and retail sales on Thursday for further direction. Ukraine concerns persisted ahead of a crucial Russian-backed referendum on the regions future on Sunday. While Washington rebuffed talks with Moscow in one of their fiercest clashes since the Cold War, the flashpoint Crimean peninsulas parliament on Tuesday voted for independence from Ukraine. The U.S. Congress called for economic sanctions to compel President Vladimir Putin to remove his armed forces from Ukrainian territory and return that territory to full Ukrainian sovereign control. Meanwhile, European ministers gave consent to improve the mandate to tackle the menace of bank failure, yet much more remained to be agreed on the scheme to handle bad banks. Ministers need to decide on how much countries should help one another in managing a troubled bank. Members were open to reducing the mutualisation period of the EUR 55 billion Single Resolution Fund to 8 years from 10 years. The Council adjusted the mandate given to the presidency for negotiations with the European Parliament on the establishment of a single resolution board and a single fund for the resolution of banks, the EU said in a statement after the meeting on Tuesday. The pound depreciated to 1.6583 against the greenback for the first time since February 12. If the pound extends decline, it may face support around the 1.64 area. The pound slipped to 0.8365 against the euro, a level not seen in 2014. This may be compared to an early high of 0.8325. The next possible support for the pound is seen around the 0.845 region. Eurozone industrial production declined unexpectedly in January largely due to a contraction in energy output, official data showed today. Industrial output fell 0.2 percent month-on-month in January, which was the second consecutive drop, Eurostat said. Economists were expecting production to expand 0.5 percent after falling revised 0.4 percent in December. The pound fell back against the yen, reaching a 1-week low of 170.31. The pound may eye support around the 169.00 zone. Confidence among Japanese households deteriorated for the third consecutive month in February, and to a larger extent than expected by economists, data from a survey showed today. The headline consumer confidence index dropped sharply to 38.2 in February from the downwardly revised 40.4 in January, the Cabinet Office said. Easing from an early high of 1.4615 against the franc, the pound declined to 1.4529, its lowest level since December 18. On the downside, 1.44 is seen as the next support level for the pound. The U.S. monthly budget statement for February is slated for release in the New York session.
Posted on: Wed, 12 Mar 2014 11:16:49 +0000
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