The British pound fell to three-month lows during Monday’s Asian session in advance of Prime Minister Theresa May’s speech on Tuesday which she will likely use to present plans for a “hard Brexit”, which will include reclaiming control of the country’s borders. The sterling traded as low as $1.1983, a low not reached since October.
The pound fell steeply against the yen, down 1.5 percent to trade at 137.34 yen. The dollar also skidded against the yen, falling to 114.17.
The Week Ahead
Trading is expected to be fairly thin on Monday, with U.S. markets closed for Martin Luther King, Jr. day. Nevertheless, a busy week lies ahead, with a conference by British Prime Minister May, two monetary policy announcements from the Federal Reserve, and Donald Trump’s U.S. presidential inauguration. The markets will also be looking to stabilize after last week’s troubles when oil prices sunk 3 percent and the dollar index showed its worst performance in two months, settling around 2.5 percent lower than its peak earlier this month. The dollar is expected to show further volatility as bank stocks report this week, with Citibank, Bank of New York Mellon and Morgan Stanley all due with reports this week.
Oil prices edged slightly higher on Monday supported by the dollar’s weakness and continued expectations about an OPEC production cut. Brent crude futures were trading at $55.64 per barrel, a 19 cent increase from their last close. U.S. WTI crude futures gained 17 cents per barrel to hit $52.54 per barrel on Monday.