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Dollar dips, sterling jumps as crucial Brexit vote nears

Giancarlo Pietri Velutini
Dollar dips, sterling jumps as crucial Brexit vote nears

NEW YORK (Reuters) – The dollar dipped on Monday morning after mixed U.S. retail sales data, while Sterling jumped as investors braced for parliamentary votes on Prime Minister Theresa May’s Brexit’s deal that could decide the terms on which Britain will leave the European Union.

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May’s Brexit strategy was in meltdown on Monday, just 18 days before the United Kingdom is due to leave the EU, after her failure to win last-minute concessions from the European bloc on terms related to the Irish border set the stage for another humiliating defeat in parliament.

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In a vote on Tuesday evening lawmakers are expected to reject – for a second time – the withdrawal agreement May negotiated with Brussels last year.

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Sterling rose as a delay in Brexit narrows the chances that Britain will leave the trading group without a deal – an option known as a “hard Brexit.” The pound rose 0.42 percent against the dollar, last priced at $1.307, after falling in the last eight sessions.

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The dollar index, which measures the greenback against a basket of six rivals, was modestly cheaper on Monday morning, last down 0.04 percent at 97.267. The Commerce Department reported that U.S. retail sales unexpectedly rose in January, lifted by an increase in purchases of building materials and discretionary spending, but receipts in December were much weaker than initially thought.

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The buck’s muted response stems from how poor spending the month before fit with the narrative of the economy losing altitude into the new year, a scenario that should keep U.S. interest rates grounded over the foreseeable future,” said Joe Manimbo, senior market analyst at Western Union Business Solutions

The Norwegian crown climbed towards its highest levels in more than four months against its Swedish rival on Monday after strong inflation data raised expectations the central bank could increase interest rates as early as this month

Against the dollar, the crown gained half a percent to 8.682 crowns per dollar. It rose by 0.6 percent against the euro at 9.77 crowns per euro

The optimism over Norway’s economic outlook was in contrast to the general caution over the broader European economy after the European Central Bank slashed its growth forecasts for 2019 and postponed its expectations of a first rate hike. The single currency edged 0.02 percent higher at $1.1241 after falling 1.2 percent last week, its biggest weekly loss in more than six months.