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Pound Falls Amid Brexit Concerns; U.S. Dollar Inches Up After Fed Minutes

Investing.com - The British pound fell on Thursday in Asia amid Brexit concerns, while the U.S. dollar inched up after the release of minutes from the last meeting of the U.S. Federal Reserve.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies edged up 0.1% to 97.982 by 11:46 PM ET (03:46 GMT).

Minutes of the Federal Open Market Committee’s April 30-May 1 meeting suggested that there is no strong case to move rates in either direction and that the Fed’s patient approach to rate-change would be appropriate “for some time.”

“Members observed that a patient approach to determining future adjustments to the target range for the federal funds rate would likely remain appropriate for some time,” according to the minutes, which noted that the intensified Sino-U.S. trade war could keep rates on hold for even longer.

The FOMC at the meeting left its benchmark policy rate unchanged in a 2.25% to 2.5% target range as expected.

Markets expect that the Fed will cut interest rates by the end of the year amid concerns over inflation running persistently below its 2% target.

On the economic outlook, “many participants suggested that their own concerns from earlier in the year about downside risks from slowing global economic growth and the deterioration in financial conditions or similar concerns expressed by their business contacts had abated,” according to the minutes.

The GBP/USD pair fell 0.1% to 1.2647 after reports that U.K. Prime Minister Theresa May could resign as soon as today amid Brexit chaos caused a sell-off of the pound.

May proposed a revised version of the Withdrawal Agreement Bill to Parliament on Wednesday, but her cabinet and backbench lawmakers have reportedly revolted at the new version and other reports suggested that members of parliament could put pressure on her to resign as soon as today.

Andrea Leadsom, a high profile Cabinet minister, resigned today and said she no longer believed the government’s approach.

"I do not believe that we will be a truly sovereign United Kingdom through the deal that is now proposed,” Leadsom wrote in her letter to May. "I have always maintained that a second referendum would be dangerously divisive and I do not support the government willingly facilitating such a concession."

The USD/CNY pair gained 0.1% to 6.9144. The Chinese currency received some support this week after the People’s Bank of China recent daily fixing for the yuan were at a stronger-than-expected level for a fourth straight day.

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