Currencies: Dollar flat, pound dips as investors digest latest Brexit step
The U.S. dollar was flat against its major rivals on Monday, though trading was volatile after the U.K. government said it would trigger the beginning of the country’s process of leaving the European Union on March 29.
The pound GBPUSD, -0.2017% was unchanged at $ 1.2392, though it swung between solid gains and losses on the day, trading between a range of $ 1.2364 and $ 1.2436. The U.K. currency is coming off a three-day rally, as well as a gain of about 1.6% over the course of last week, which took it to its highest level in about three weeks.
According to the Agence France-Presse news agency, European Union officials said “everything is ready” for the Brexit trigger.
“The pound started out strong today, but these reports have tempered the enthusiasm,” said Colin Cieszynski, chief markets strategist at CMC Markets, who noted that the pound has been trading up in anticipation of Brexit lately, and selling on any delays.
“Once it actually gets triggered and both sides get their negotiation stances on the table, then the market will be able to absorb the terms and move on. Once we have more details we’ll have less fear and more discounting. Until then, we don’t know what it will look like.”
Also contributing to the pound’s move was last week’s hawkish surprise from the Bank of England, when a member voted to increase interest rates.
In other currencies, the ICE Dollar Index DXY, -0.04% traded flat at 100.30, though it hit a low of 100.02 earlier in the session. That represented the lowest level for the index since Feb. 7. The WSJ Dollar Index BUXX, -0.07% dipped 0.1% to 90.47.
The euro EURUSD, +0.1211% rose to $ 1.0756 from $ 1.0747 late Friday in New York. The yen USDJPY, -0.01% was essentially unchanged against the dollar, with the greenback buying ¥112.66, compared with ¥112.69 on Friday.
“We’re in-between a lot of stuff right now, with the Fed meeting last week, and the EU summit next week. It should be pretty quiet in currencies while we wait for the next big thing to happen,” Cieszynski said.