News Column

Pound Slides Amid Risk Aversion

June 25, 2014

BRUSSELS (Alliance News) - The British currency weakened against the other major currencies in the early European session on Wednesday amid risk aversion, as European stocks fell on worries about the situation in Iraq.

The benchmark UK FTSE 100 is currently down 27.96 points or 0.41% at 6,759, the France CAC 40 is down 30.78 points or 0.68% at 4,487 and the German DAX down 59.92 points or 0.60% at 9,878.

According to reports, Syrian warplanes struck targets in the western Iraqi province of Anbar, further broadening the Middle Eastern crisis. Syrian warplanes carried out airstrikes in western Iraq, killing at least 50 people, as part of an effort by foreign allies of Baghdad's Shiite-dominated government to shore up Iraqi armed forces and curb the advances of Sunni insurgents.

US Secretary of State John Kerry, meanwhile, urged Kurdish leaders to back the Iraqi government in its fight against militants storming across the country and to support the formation of a new national government in Baghdad by July 1.

The pound fell to nearly 2-week lows of 1.5142 against the Swiss franc and 0.8030 against the euro, from yesterday's closing quotes of 1.5171 and 0.8008, respectively. If the pound extends its downtrend, it is likely to find support around 1.50 against the franc and 0.81 against the euro.

German consumer confidence is set to improve in July, survey data from market research group GfK showed. The forward-looking consumer sentiment index rose to 8.9 in July from a revised 8.6 points in June, as economic expectations rose to a three-year high. Economists had forecast the indicator to rise to 8.6 points from June's original estimate of 8.5.

The economic expectations index rose 7.7 points to 46.2 in June. Willingness to buy gained 3.7 points to reach 53.2. Meanwhile, income expectations fell by 0.6 point to 47.2 in June.

Swiss consumption indicator rose in May, helped by strong retail sales performance, a report from financial services company UBS showed. The UBS consumption index climbed to 1.77 in May from 1.68 in April.

The pound which ended yesterday's deals at 1.6983 against the US dollar and 173.12 against the yen, weakened to a 1-week low of 1.6951 and 9-day low of 172.71, respectively. On the downside, 1.68 against the greenback and 170.75 against the yen is seen as next support level for the pound.

Looking ahead, In the New York session, US first quarter annual GDP, quarterly core personal consumption expenditure and Markit's flash services PMI for June are due to be released.

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Source: Alliance News

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