The British pound weakened against the other major currencies in the early European session on Monday as European shares fell, tracking the losses in the Asian session, due to weak economic data from the China and as commodity prices retreated. Meanwhile, investors are treading cautiously ahead of this week’s meeting of the U.S. Federal Reserve.
The U.K.’s FTSE 100 index is currently down 0.34 percent or 22.15 points at 6,557, France’s CAC 40 index is down 1.51 percent or 76.54 points at 4,980 and Germany’s DAX is down 1.26 percent or 143.10 points at 11,204.
Few economists expect the Federal Reserve’s two-day policy meeting to result in a rate increase when it concludes Wednesday. Nonetheless, investors wait to see whether Fed Chair Janet Yellen will attempt to guide market expectations towards the possibility of a September rate hike.
Besides the FOMC meeting, a slew of U.S. reports due this week on second-quarter GDP, durable goods orders and consumer confidence could provide further clues on the strength of the world’s largest economy.
The weak earnings reports also dampened investor sentiment.
Closer home, there is no need for an interest rate hike soon in the U.K., Bank of England’s Chief Economist Andy Haldane said on Friday. Haldane repeated that rates could go up or down in the future and that he thought the current level was appropriate for the near term.
In the Asian trading today, the pound held steady against its major rivals.
In the early European trading, the pound fell to nearly a 2-week low of 191.07 against the yen and and a 2-week low of 0.7159 against the euro, from early highs of 192.19 and 0.7066, respectively. If the pound extends its downtrend, it is likely to find support around 186.00 against the yen, 0.72 against the euro,
Pulling away from an early 4-day high of 1.5543 against the U.S. dollar, the pound dropped to 1.5489. On the downside, 1.52 is seen as the next support level for the pound.
Against the Swiss franc, the pound slipped to nearly a 2-week low of 1.4856 from an early high of 1.4941. The pound is likely to find support around the 1.45 area.
Meanwhile, the Australian dollar also fell against its major rivals.
The Australian dollar fell to nearly a 7-1/2-month low of 1.5248 against the euro and more than a 1-1/2-month low of 1.1009 against the NZ dollar, from early highs of 1.5062 and 1.1073, respectively. If the aussie extends its downtrend, it is likely to find support around 1.53 against the euro and 1.06 against the kiwi.
Against the yen and the Canadian dollar, the aussie dropped to more than a 2-week low of 89.64 and nearly a 2-week low of 0.9451 from early highs of 90.21 and 0.9508, respectively. On the downside, 89.00 against the yen and 0.93 against the loonie are seen as the next support level for the aussie.
The aussie edged down to 0.7265 against the U.S. dollar, from an early high of 0.7302. The aussie may test support near the 0.71 area.
Looking ahead, U.S. durable goods orders data for June is set to be published in the New York session.
The material has been provided by InstaForex Company – www.instaforex.com