Yuan firmer, pound eases on mixed Brexit polls and renewed US Fed rate hike concerns

PUBLISHED : Tuesday, 21 June, 2016, 12:10pm
UPDATED : Tuesday, 21 June, 2016, 12:10pm

Chinese yuan edged up slightly on Tuesday to extend gains for the third straight day, while the British pound was facing resistance after seeing its biggest one-day gain since 2008.

The onshore yuan in Shanghai climbed 0.04 per cent or 25 basis points to 6.5743 per dollar at 10.55am Tuesday, while the offshore yuan in Hong Kong also strengthened, up 0.08 per cent or 50 pips to 6.5838 per dollar.

The People’s Bank of China set the mid point of the yuan against the US dollar at 6.5656 on Tuesday morning, stronger by 52 basis points, or 0.08 per cent.

The British pound, however, shed 0.09 per cent to trade at US$1.4666 as of 11.00am. On Monday it jumped over 2 per cent and at one stage hit US$1.4717, the highest level since January, as latest polls suggest the UK will more likely vote to remain in the European Union.

Trading in the pound was volatile as UK polls on late Monday showed mixed results again. The YouGov poll showed the “Leave” camp having 44 per cent of the votes compared with 42 per cent for the “Remain” camp, while the ORB survey indicated 53 per cent for “Remain” versus 46 per cent for “Leave”.

Besides the Brexit impact, sterling’s rise will face resistance if Janet Yellen, chairwoman of the US Federal Reserve, turns less cautious at her two-day semi-annual congressional testimony before the Senate Banking Committee tonight, DBS Group Research said in a report.

Fed hike expectations could return to the market after the UK Brexit referendum. As seen in May, this could support the US dollar once again, DBS said.

The euro continued its strength for the third day, up 0.19 per cent to stand at US$1.3333 per euro. The yen, however, ended its seven-day winning streak to stand at 104.01 against the greenback, down 0.09 per cent.