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FX round-up: Sterling downcast on Friday as US Congress votes on Trump's Healthcare Bill

By Andrew Schonberg

Date: Friday 24 Mar 2017

FX round-up: Sterling downcast on Friday as US Congress votes on Trump's Healthcare Bill

(ShareCast News) - Sterling turned in a downcast Friday performance as it slipped on most key pairs, with global markets drifting as US President Donald Trump's Healthcare Bill goes to a congressional vote, and ahead of UK formally beginning its EU-exit talks next week.
At 17:17 GMT, sterling was down 0.23% to $1.2492, and down 0.45% to €1.1559. The dollar-spot index fell 0.15% to $99.615.

"The pound has slipped back below the €1.16 level against the euro, which found support this morning after the euro zone's preliminary purchasing-managers' index (PMI) data came in ahead of expectations," said Chris Saint, senior analyst at HL Currency Service.

The Eurozone's March composite PMI measure of manufacturing and services activity rose to 56.7, from 56.0 previously and its highest level in almost six years.

Saint said this data would give the European Central Bank greater confidence that its current stimulus policies were having the desired impact.

Sterling was also lower against the aussie, loonie, kiwi, rand and yen, with traders unsurprisingly cautious ahead of Prime Minister Theresa May triggering Article 50 of the Lisbon Treaty next week.

Many expect up to two years of sterling volatility to follow, with the currency also heavily devalued after the Brexit vote last year, resultant rising inflation and the speculated possibility of a Bank of England interst-rate rise later this year.

Meantime, the dollar was down as US lawmakers gathered in Congress to vote on Trump's Healthcare Bill, which would do away with Obamacare.

"The outcome could represent a turning point within the Trump rally, either reigniting it or possibly snuffing it out," said Mike van Dulken head of research at Accendo Markets.

Saint added that sterling is hovering slightly below its one-month high against the US dollar, at just under the $1.25 level by noon.

"Markets appear reluctant to push the dollar too far in either direction ahead of a delayed vote on President Trump's healthcare bill, which is widely seen as a gauge of his ability to push forward with his intended economic plans," he said in a statement.

FXTM research analyst Lukman Otunuga further added that the EURUSD pair had bounced back in style in March as the receding political risks in Europe rekindled appetite for the EU unit.

At 17:17 GMT, the euro was up 23% to $1.0808.

"Technical traders will be paying very close attention to how prices react to the 1.0800 resistance with a breakout encouraging a further incline higher towards 1.0850," said Otunuga.

"If economic data from Europe continues to display signs of stability and the Dollar weakens further, then the EURUSD could be poised for further upside in the short to medium term."

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