Pound Falls As Storm Frank Strikes UK

The pound drifted lower against its most major rivals in European trading on Wednesday, as Storm Frank brought heavy rain and gales across the UK, increasing risks of further flooding and havoc.

Thousands of homes in Northern Ireland, Scotland, the north-east and Ireland have been left without power, and high winds caused disruption to traffic.

There are 3 severe flood warnings, 46 warnings and 94 alerts in England and wales, according to the U.K. Environmental agency.

The effects of continued flooding could incur economic losses of nearly GBP 6 billion to the U.K. economy.

European markets are trading lower, amid weak commodity prices.

Oil collapsed after the American Petroleum Institute reported Tuesday that U.S. crude-oil inventories rose by 2.9 million barrels in the latest week.

In economic front, data from the Nationwide Building Society showed that U.K. house prices increased at the fastest pace in seven months in December.

House prices advanced 4.5 percent year-on-year in December, the biggest since May when it climbed 4.6 percent. Economists had forecast house price growth to rise to 3.8 percent from 3.7 percent.

The currency showed mixed trading in Asian deals. While the pound rose against the dollar and the yen, it was steady against the euro and the franc.

The pound fell to a weekly low of 1.4637 against the Swiss franc, from a high of 1.4727 hit at 1:30 am ET. The next possible downside target for the pound is seen around the region.

Figures from the UBS bank showed that Switzerland’s consumption increased in November, driven by the less gloomy outlook in the retail sector and the growth in new car registrations.

The consumption indicator climbed to 1.66 in November from 1.63 in the preceding month, pointing to further growth in private consumption in the months ahead.

The pound reached as low as 1.4793 against the greenback, reversing from its previous high of 1.4844. If the pound-greenback pair extends slide, 1.46 is probably seen as its next support level.

Reversing from an early high of 178.83 against the Japanese yen, the pound edged down to 178.25. On the downside, 176.00 is possibly seen as the next support level for the pound.

The pound fell to 0.7388 against the euro in European deals, but has stabilized in a short while. At Tuesday’s close, the pair was valued at 0.7366.

Looking ahead, U.S. pending home sales data for November is due to be released shortly.

The material has been provided by InstaForex Company – www.instaforex.com