Pound rises against dollar, while yen falls

The pound sterling edged up against the dollar on Monday, with credit going in part to buzz around a possible U.K. corporate tax cut that could boost Britain’s economy.

Meanwhile, Japan’s yen fell against the buck as haven demand eased, and the Australian dollar was volatile after an inconclusive election Down Under.

The pound  traded up 0.1% to $1.3282, recovering further from its late-June slump sparked by concerns about the U.K. vote to leave the European Union.

The mild gains for sterling come after U.K. Treasury chief George Osborne said he plans to cut the corporation tax in the U.K., said Richard Perry, an analyst at Hantec Markets, in a note. The cut marks an effort to lure business investment as the British economy reels from the Brexit vote.

A June reading for a U.K. construction purchasing managers’ index is due at 9:30 a.m. London time, or 4:30 a.m. Eastern Time.

“In a departure from the norm, the PMIs (Mon–Tue) should be discounted given that the surveys were conducted before the U.K. exit vote,” said Sue Trinh, senior currency strategist at RBC, in a note.

Thousands of European Union supporters marched through the streets of London on Saturday to protest over the United Kingdom’s vote to leave the 28-nation bloc.

The yen dropped as Japan’s Nikkei Stock Average gained as investors bet the Bank of Japan would soon loosen policies by cutting interest rates or expanding asset-buying programmes. The dollar was buying ¥102.69, up 0.2%.

“There is still a sense that safer haven plays will retain a bid with gold pushing higher and the yen also supported,” Hantec’s Perry said.

The Aussie was up 0.3% to $0.7516, but the currency was down earlier. Reports on Australia’s elections over the weekend said no party yet has a majority in Parliament, as voters defied Prime Minister Turnbull’s call for political stability in the wake of the Brexit vote’s global aftershocks.

“Stalemate in the Australian election looked to put pressure on the Aussie earlier, but it has since pared its losses, with traders now more interested in the Reserve Bank of Australia decision tomorrow morning,” Perry said.

In other currency moves, the ICE U.S. Dollar Index  was up less than 0.1% to 95.69, while the euro dipped 0.2% to $1.1117.

U.S. markets are shuttered on Monday in observance of the Independence Day holiday.

Source: MarketWatch