EU worries lift dollar, pound steady after UK no-confidence vote
* UK PM May wins confidence vote, boosting pound
* Poor German data, Draghi warning, weighs on single
* GRAPHIC-World FX rates in 2018: http://tmsnrt.rs/2egbfVh
(Recasts; adds analyst quotes; adds May vote news; updates
By Kate Duguid
NEW YORK, Jan 16 (Reuters) - The dollar rose against the
euro on Wednesday as worries about the euro zone economy dented
the single currency, while sterling was steady after British
Prime Minister Theresa May's government won a no-confidence vote
The euro was down 0.22 percent against the dollar, last at
$1.139, after being compressed in morning trade to a 12-day
trough of $1.138.
Data this week showed Germany barely escaped a recession in
the second half of 2018 and European Central Bank chief Mario
Draghi warned on Tuesday the euro zone economy was weaker than
"The dimmer outlook was acknowledged by outgoing ECB
President Mario Draghi, a cautious tone that gave added traction
to the euro's slide from three-month highs," said Joe Manimbo,
senior market analyst at Western Union. "Add it all up and it
seems increasingly less likely that the ECB would be able to
normalize monetary policy later this year."
The dollar rose even though Federal Reserve Chair Jerome
Powell has signaled his willingness to pause the bank's monetary
tightening plan. With inflation showing no sign of rising above
the 2 percent target, and mounting worries about trade policy
and slowing global growth, Powell has said the central bank will
take a "patient" approach to rate hikes this year.
The pound held onto the day's gains on Wednesday, trading
just off two-month highs against the euro.
May survived the no-confidence motion after securing the
backing of her own party's rebels and Northern Irish allies. But
she must now try to find a consensus with other lawmakers over
how to proceed with Brexit after the deal she presented was
voted down on Tuesday. She proposed immediate talks with other
"She survived on a party-line vote, so we're not seeing much
reaction in sterling to the outcome. Where we go from here is
obviously an open question," said Daniel Katzive, head of
foreign exchange strategy for North America at BNP Paribas.
In late afternoon trade, sterling was trading at 88.47 pence
per euro, stronger than the 88.65 just before the vote
and up 0.29 percent on the day. It held just off the two-month
high of 88.40 pence.
Against the dollar, it was a shade firmer at $1.287,
compared to around $1.286 before the vote. It hit a two-month
high on Monday at $1.293.
(Reporting by Kate Duguid and Abhinav Ramnarayan;
Editing by Susan Thomas)
First Published: 2019-01-16 02:10:56
Updated 2019-01-16 23:14:10
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