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Wednesday, May 22, 2019

Pound Edges Up After May Presents “New” Brexit Deal

The U.S. dollar was little changed on Wednesday in Asia while the British pound edged up after U.K. Prime Minister Theresa May presented a “new” Brexit deal.
The U.S. dollar index that tracks the greenback against a basket of other currencies was unchanged at 97.868.

It received some support earlier in the day and is currently trading near a one-month high after Federal Reserve Chairman Jerome Powell indirectly argued against cutting interest rates in the near term due to the already-high level of corporate debt.
“Business debt has clearly reached a level that should give businesses and investors reason to pause and reflect,” Powell said at a conference, noting that corporate borrowing at a record level of around 35% of corporate assets.
News that the U.S. granted Chinese telecommunications equipment maker Huawei Technologies a license to buy U.S. goods for at least 90 days also sent the U.S. dollar higher overnight.
However, markets are once again in the risk-off mood today as Chinese ambassador to the U.S. Cui Tiankai blamed Washington for “changing its mind so often” in trade talks and that the U.S. is the side that broke the deal already reached.
The Chinese yuan slipped against the U.S. dollar following the news, while reports that Chinese President Xi Jinping suggested in a local tour on Tuesday that the trade war would not end in the near future is also cited as a headwind for the Chinese currency.
The President did not directly mention the U.S. or the ongoing trade war, but his remarks were widely interpreted as a sign that Beijing is not going to cave in to his U.S. counterpart Donald Trump’s demands anytime soon.
“We are here at the starting point of the Long March to remember the time when the Red Army began its journey,” Xi said in the Jiangxi province during a domestic tour. “We are now embarking on a new Long March, and we must start all over again!”
The “Long March” refers to China’s civil war in the 1930s.
The GBP/USD pair was up 0.1% to after U.K. Prime Minister Theresa May set out a “new” Brexit deal that offers the prospect of a vote on holding a second referendum.
However, traders and analysts have expressed concerns as the withdrawal agreement itself remains largely the same as her previous proposals.

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