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Dollar Sinks To 6-Month Low Against British Pound On Snap Election News

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The dollar has dropped sharply against the pound sterling Tuesday after British Prime Minister Theresa May announced a snap general election for June 8. The buck is also weaker against the Euro and the Japanese Yen after another disappointing day on the U.S. economic front.

New residential construction in the U.S. pulled back sharply in the month of March, according to a report released by the Commerce Department on Tuesday, although the report also showed a rebound in building permits.

The report said housing starts plunged by 6.8 percent to an annual rate of 1.215 million in March from an upwardly revised 1.303 million in February. Economists had expected housing starts to drop by 2 percent to a rate of 1.262 million from the 1.288 million originally reported for the previous month.

Reflecting a substantial rebound in utilities output, the Federal Reserve released a report on Tuesday showing that U.S. industrial production increased in line with economist estimates in the month of March. The report said industrial production climbed by 0.5 percent in March after inching up by 0.1 percent in February. The increase in production matched the consensus estimate.

In a surprise statement at 10 Downing Street, British Prime Minister Theresa May said the U.K. needed stability, certainty and strong leadership after the June 2016 referendum. Her government has delivered that, she claimed.

She also sought unity in the Westminster.

"The country is coming together, but Westminster is not," May said.

May said that an election is needed now because other parties are opposed to her government's Brexit plans.

"So we need a general election and we need one now. We have at this moment a one off chance to get this done," May said.
The dollar has plunged to over a 6-month low of $1.2850 against the pound sterling Tuesday afternoon, from an early high of $1.2512.

The buck has dropped to over a 2-week low of $1.0725 against the Euro this afternoon from an early high of $1.0636.

Germany's manufacturing employment increased in February from a year ago, data from Destatis showed Tuesday. The number of people worked in local manufacturing units rose by around 53,000 or 1.0 percent from prior year in February.

Japan's government nominated Goushi Kataoka, a private economist and banker Hitoshi Suzuki to the Bank of Japan's nine-member policy board on Tuesday.

Kataoka, an advocate of aggressive monetary easing and an economist at Mitsubishi UFJ Research and Consulting, and Suzuki, director for Bank of Tokyo-Mitsubishi UFJ, will replace Takahide Kiuchi and Takehiro Sato in July.

The greenback has slipped to around Y108.575 against the Japanese Yen this afternoon, from an early high of Y109.221.

by RTT Staff Writer

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