Dollar Rises vs Pound, Euro as Hard Brexit Approaches
The dollar was close to its highest level in nearly three weeks in early trading in Europe Tuesday, as the rising likelihood of a disruptive and disorderly Brexit hit confidence in both the euro and sterling.
At 03:00 AM ET (0700 GMT), the dollar index, which measures the greenback against a basket of six major currencies, was at 96.920, up some 0.2% from its closing levels on Monday.
The pound had fallen nearly a cent late Monday after lawmakers yet again voted down all proposed alternatives to the government’s negotiated Withdrawal Agreement. By 03:00 AM ET, it had recovered a fraction to $1.3044.
The euro likewise fell under $1.12 for the first time in over three weeks after the round of voting, on fears that a hard Brexit could also badly hit the Eurozone economy. Clemens Fuest, President of the Ifo research institute in Munich and a member of the German government’s council of economic advisers, told the radio station Deutschlandfund on Monday that a hard Brexit “could be the straw that breaks the camel’s back” and tips the German economy into recession. By 03:00 AM ET, it was at $1.1197.
Guy Verhofstadt, the EU parliament’s Brexit coordinator, tweeted after the votes that a hard Brexit is now “nearly inevitable”.