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Sterling continues to fall as selling pressure remains

Sterling continues to fall as selling pressure remains

Sterling was subjected to further selling pressure after Monday’s European open amid further domestic and global pressures. Confidence in the UK economy remains notably weak. Sterling dipped to fresh 22-month lows close to 1.2260 against the dollar.

BRC (British Retail Consortium) data recorded a 1.7% decline in like-for-like sales in the year to April and there were further concerns over Brexit developments. Risk trends tended to dominate and a very fragile recovery allowed Sterling to recover to near 1.2360 on Tuesday with the Euro around 1.1690 as overall Sterling sentiment remained weak.

The dollar overall maintained a strong tone in early Europe, especially with commodity currencies remaining under heavy pressure. The Euro was able to find support below the 1.0500 level and another failure to hold it below this level triggered a round of short covering.

There were some concerns that weaker equity markets would undermine the US outlook and speculation that this could trigger at least a limited reassessment by the Fed. The Euro strengthened to highs above 1.0570 before faltering again with a decline to 1.0530 at the European close.

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