News Column

Pound Slides On Concerns Over New Sanctions On Russia

July 17, 2014

BRUSSELS (Alliance News) - The pound declined against the other major currencies in early European deals on Thursday, as European stocks fell on concerns about the US and the EU imposing more aggressive sanctions against Russia for its support to separatist movement in Ukraine.

The new sanctions will affect major Russian banks and its defense and energy companies, and also freeze the US assets and curb American business contacts for eight Russian arms companies making weapons.

The US latest sanctions expand its previous penalties, targeting two major Russian banks such as Gazprom Bank and VEB, and two energy companies, namely Novotek and Rosneft. These entities will not be able to get new medium and long-term financing in the US.

In economic news, U.K 's marketing budgets increased for the seventh straight quarter in the second quarter of 2014, as firms took advantage of a strengthening business climate, results of a survey by Markit Economics and IPA showed.

The Bellwether survey showed that a net balance of 15.2% of companies raised their advertising budgets in the second quarter. This was the second highest reading in 14-year survey history and down from the survey high of 20.4% recorded in the first quarter.

Reversing from an early high of 1.7143 against the greenback, the pound slipped to a 2-day low of 1.7107. If the pound continues slide, it may find support around the 1.705 area. The pair finished yesterday's trading at 1.7134.

The pound came off from an early high of 174.26 against the yen, sliding to a 2-day low of 173.63. The pair closed Wednesday's trading at 174.20. The next possible downside target for the pound is seen at the 172.00 mark.

Japan's corporate loan demand from banks remained unchanged in the second quarter, the latest Senior Loan Officer Opinion survey from the Bank of Japan showed. The balance of demand for loans from firms came in at 5, unchanged from the prior quarter.

The pound eased to 1.5352 against the Swiss franc, from an early high of 1.5399. On the downside, the pound is likely to find support around the 1.53 region. The pair finished yesterday's trading at 1.5385.

After rising to near a 2-year high of 0.7888 against the euro in early deals, the pound eased and was trading at 0.7908. The pound may possibly find support around the 0.80 mark. At Wednesday's close, the pair was worth 0.7890.

Looking ahead, the US building permits and housing starts for June and weekly jobless claims for the week ended July 12 are due in the New York session.

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Source: Alliance News

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