The pound edged into negative territory in Asia briefly on Thursday as markets noted the U.K. faces a hard road to keep business links in place in negotiations to exit from the European Union that were formally initiated overnight.
GBP/USD dipped to 1.2437, just into negative territory, retracing earlier gains as the EUR/USD came under further selling, down 0.17% to 1.0747.
“The weakness in sterling was directly related to all the uncertainty and questions that we know have, after the U.K. began these proceedings. There’s a lot more questions than answers, I do believe that we could see further sterling weakness,” Kathy Lien, managing director at BK Asset Management said in a note to clients.
AUD/USD traded up 0.14% to 0.7659 after HIA new home sales rose 0.2% month-on-month in February, compared to a 2.2% decline the previous month. USD/JPY changed hands at 111.33, up 0.25%.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose 0.17% to 99.95.
Overnight, the dollar rose against a basket of major currencies on Wednesday, buoyed by better than expected U.S. home sales data while a slump in both the euro and pound underpinned upside momentum in the greenback.
The dollar continued its stuttering recovery from multi-month lows, hitting a session high of 99.96, after the U.S. National Association of Realtors said its pending home sales increased by 5.5% last month, which was far above economists’ forecast of a 2.4% increase.
Meanwhile, several comments from Federal Reserve officials helped shift investors’ focus to the prospect of additional rate hikes this year, after Fed member Charles Evans said he has confidence that two total rate increases in 2017 seems “very safe”.
Federal Reserve Bank of Boston President Eric Rosengren took a somewhat bullish outlook on possible rate hikes, after he said the U.S. central bank should be prepared to raise interest rates a total of four times in 2017 to prevent the U.S. economy from overheating.