Pound Falls Victim to Dollar Rally Amid Brexit, Economic Concern

  • Sterling facing political, economic ‘double whammy’: Mizuho
  • Currency drops to lowest level in two weeks versus greenback

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The pound fell to a two-week low as the currency emerged as one of the main victims of a broad-based dollar rally on Tuesday.

The U.K. currency declined as underlying concerns about the nature of the nation’s exit from the European Union made it one of investors’ main targets during the dollar’s gain, leaving it the second-worst performer among Group-of-10 currencies. Data that showed retail sales unexpectedly fell in January, a contrast to the recent resilience in U.K. data, compounded the move.

“There’s a general dollar bid that’s come back in the fray across the board and that’s helping drag the pound down. That’s one side of it,” said Neil Jones, head of hedge-fund sales at Mizuho Bank Ltd. “The other side of it is the political risks. My sense is markets are looking to buy some dollars but also sell sterling on political turmoil. Also retail sales data overnight was very disappointing. It’s a bit of a double whammy for the pound at the moment.”

  • Sterling fell 0.9 percent to $1.2354 as of 9:26 a.m. London time. It earlier reached as low as $1.2347, the weakest since Jan. 23
  • The currency extended declines as stops below the $1.2400 handle were filled, two traders in London and Europe say
  • The move took out the Jan. 31 low of $1.2413. More support lies at $1.2346, the 50 percent retracement of the rally since Jan. 16
  • Some information comes from FX traders familiar with the transactions who asked not to be identified because they are not authorized to speak publicly
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