Pound Extends Rise As Tory-DUP Reach A Deal

The British pound continued to be higher against other major currencies in the European session on Monday, as the Conservatives and the DUP have reached an agreement to support Theresa May’s minority government.

The deal is expected to see the Democratic Unionist Party (DUP)’s 10 MPs support May’s government providing it with the majority required to push through legislation, after the Conservatives lost seats and resulted in hung parliament following the general election on June 8.

Meanwhile, European stocks surged, with banks leading gains, after Italy moved to shore up confidence in its fragile banking system.

The Italian government agreed to bail out two banks in the Venice region at a cost of 5.2bn euros after the European Central Bank ruled that those banks were “failing or about to fail”.

Investor sentiment also remained supported by higher oil prices, upbeat German business sentiment data and news that Swiss consumer group Nestle has become the latest target of U.S. activist investor Daniel Loeb.

In the Asian trading, the pound rose against its major rivals.

In the European trading, the pound rose to a 1-week high of 1.2759 against the U.S. dollar and a 6-day high of 142.34 against the yen, from early lows of 1.2706 and 141.48, respectively. If the pound extends its uptrend, it is likely to find resistance around 1.29 against the greenback and 144.00 against the yen.

The pound advanced to a 6-day high of 1.2401 against the Swiss franc, from an early low of 1.2328. On the upside, 1.25 is seen as the next resistance level for the pound.

Against the euro, the pound advanced to 0.8773 from an early low of 0.8800. The pound may test resistance around the 0.85 region.

Looking ahead, U.S. durable goods orders for May is slated for release in the New York session.

At 1:30 am ET, European Central Bank is scheduled to deliver opening remarks at the European Central Bank Forum on Central Banking, in Portugal.

by RTT Staff Writer

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