Yuan closes flat; pound shaken by potential second Scottish independence vote

Reuters reported Scottish government may announce second referendum for next year when Britain still exists within the European Union

PUBLISHED : Monday, 27 February, 2017, 11:23am
UPDATED : Monday, 27 February, 2017, 8:58pm

The Chinese yuan ended almost flat on Monday after the central bank weakened the fixing, while the pound saw sharper drops with possibilities of an independence referendum for Scotland gaining ground.

The onshore yuan in Shanghai ended 4 points stronger to 6.8714 against the US dollar at 4.30pm. It was traded at 6.8708 per dollar at 5.35pm, while the offshore yuan in Hong Kong slid 0.1 per cent to 6.8622 per dollar.

The People’s Bank of China on Monday continued to set the yuan reference point weaker, at 6.8814 against the US dollar, down 159 basis points or 0.2 per cent than on Friday, after it continued to turn the fixing stronger for two days.

The pound, however, slipped 0.3 per cent to US$1.2424, extending its losing streak for two days in a row, amid news that Scotland is likely to face another vote to exit from Britain next year through another referendum.

Reuters reported that Scottish government may announce second independence referendum for next year as Britain still exists in the European Union.

A majority of the votes in Scotland went to “stay” in the Brexit vote in June last year.

Sterling has now lost over 1 per cent in its value over the past two days.

But analysts warned that the US market are likely to be the focus of traders this week.

“This week will be an important test for Trump reflation trades. All eyes will be on US President Donald Trump’s address to Congress on Tuesday,” analysts at DBS Bank wrote in a quick note this morning.

Trump said on February 9 he would deliver “phenomenal” tax cuts in two to three weeks, blamed for record highs in US stocks in the past fortnight.

The US dollar, however, didn’t find must momentum as the Federal Reserve is not eager to raise the interest rate this month.

“The last thing US dollar bulls need are two disappointments from Trump and the Fed this week,” DBS said.

DXY, the US-dollar Index, slid 0.06 per cent to 101.05.