Pound slips as post-Brexit trade uncertainties linger on

Bloomberg

The pound declined the most in a week against the dollar amid lingering uncertainties about how long it will take for the UK to forge post-Brexit trade agreements with the European Union.
Sterling, which depreciated against most Group-of-10 peers, also reached a 10-month low versus the euro. Prime Minister Theresa May’s government is releasing a third paper Tuesday on how it sees its future relationship with Europe. Britain and the EU still haven’t reached an agreement on when it would be time to start discussing a trade deal.
The pound has been buffeted not just by political uncertainty but also by underwhelming data While a report released Tuesday showed that Britain posted its first July budget surplus in 15 years last month, debt costs in the fiscal year to date rose by 23 percent, the biggest increase for the period since 2010.
Recent data has showed consumers flagging and wage growth lagging inflation “Better-than-expected public finance data is failing to support sterling,” said Neil Jones, the head of hedge fund sales at Mizuho Bank Ltd.
“My sense is fresh news from the UK subprime sector may be sending off early alarm bells on consumer lending. The global subprime crises may be 10 years old but we remember it like yesterday”.
Turmoil at Provident Financial is also weighing on pound, Jones says, with the stock slumping the most on record as Chief Executive Peter Crook stepped down and as the subprime lender forecast a full-year loss and scrapped its dividend GBP/USD falls 0.4% to 1.2849, approaching 1.2832 reached on August 18 which was the lowest in a month support at 1.2832, August 18 low, resistance at 1.2917, August 18 high.
While the Brexit papers are a positive development, it’s failing to support the pound, likely “due to the fact that EU’s reaction so far has been muted,” analysts at Commerzbank, including Esther Reichelt, write in note “That means that the next round of negotiations that start next week acquires particular significance”.
The “Brexit risk premium therefore remains one of the major factors putting pressure on sterling,” they write. The latest details the UK government will provide focus on civil judicial cooperation ahead of a much-anticipated document on Wednesday on the role of the EU Court of Justice EUR/GBP little changed at 0.9163, having earlier reached 0.9173 which was the highest level since October 7.