Forex – U.S. Dollar Higher While Sterling Tumbles

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Forex - U.S. Dollar Higher While Sterling Tumbles

Investing.com – The U.S. dollar was higher on Monday, as the pound tumbled amid reports that UK Prime Minister is cancelling a vote on Tuesday on the Brexit draft proposal.

GBP/USD slumped 1.20% to 1.2598 as of 10:52 AM ET (15:52 GMT).

May plans to postpone the vote in order to renegotiate a better deal with Brussels. The vote on Tuesday was not expected to pass.

EU executives said on Monday they would not change the terms of its agreement for the UK to leave the bloc.

The U.S. dollar was higher as trade tensions between the U.S. and China increased demand for risk-averse products.

The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, rose 0.38% to 96.83.

On Sunday Chinese officials summoned the U.S. ambassador to Beijing to protest the arrest of the chief financial officer of Chinese electronics giant Huawei, Meng Wanzhou, in Canada. U.S. officials are investigating her role in the company’s operations in Iran.

The arrest of Meng has added to tensions between the two biggest economic countries in the world. U.S. President Donald Trump and Chinese President Xi Jinping agreed on Dec. 1 to a 90-day truce on trade tariffs.

Still, U.S. Trade Representative Robert Lighthizer said on Sunday there is a “hard deadline”, noting U.S.-China trade negotiations need to reach a successful end by March 1.

The dollar was higher against the safe-heaven Japanese yen, with USD/JPY gaining 0.31% to 113.03. In times of uncertainty, investors tend to invest in the Japanese yen, which is considered a safe asset during periods of risk aversion.

The euro was higher, with EUR/USD up 0.22% to 1.1402.

Elsewhere, NZD/USD rose 0.15% to 0.6883 while AUD/USD was down 0.15% to 0.7194. The Canadian dollar increased with USD/CAD rising 0.36% to 1.3371.

Reuters contributed to this report.

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