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Forex - Sterling Slips Following Cabinet Reshuffle

Published 09/01/2018, 11:12
© Reuters.
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Investing.com - The pound was lower against most major currencies on Tuesday following the UK government’s Cabinet reshuffle on Monday, which some critics labelled as 'shambolic'.

Sterling slipped 0.27% against the dollar on Tuesday morning. At 11:50 GMT, GBP/USD was 1.3533.

The Cabinet reshuffle had been billed as a government shake-up that would reassert Prime Minister Theresa May’s power over the Conservative Party, as the government heads into Phase 2 of Brexit negotiations.

The reshuffle of Cabinet ministers fell flat as one minister, health secretary Jeremy Hunt, reportedly refused to change posts, while Justine Greening, health secretary, resigned rather than take up a new role in charge of pensions.

The Conservative party’s official Twitter account also tweeted to congratulate Chris Grayling as new chairman of the party, when in reality the post was given to immigration secretary Brandon Lewis.

The British Retail Consortium released data on Tuesday showing that British consumers cut spending on non-food items in the three months to December. Non-food sales dropped by 1.4%, representing the biggest fall since 2009.

Overall spending increased by just 1.1%, reflecting the squeeze inflation is putting on the consumer. In November, inflation peaked to 3.1%.

The dollar was near one-week highs against most major currencies on Tuesday following Fed speak supporting a number of interest rate hikes in 2018.

The US dollar index, which measures the greenback’s strength against a trade weighted basket of six major currencies, was 92.29, an increase of 0.24%.

Data showed economic sentiment improved more than expected in the euro-zone in December, however the euro failed to react, falling 0.33% against the dollar, EUR/USD sat at 1.1928. EUR/GBP dipped just 0.08% to 0.8813.

The Bank of Japan signalled eventual normalization of monetary policy, lifting the Japanese yen. GBP/JPY was 152.66, down 0.55%.

GBP/CHF fared better, with an increase of 0.27% to 1.3302.

GBP/AUD was almost unchanged at 1.7306. GBP/NZD was down 0.24% to 1.8863, with GBP/CAD was down 0.08% to 0.8813.

Investors will be looking the UK trade figures and manufacturing production numbers released on Wednesday morning.

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