FX round-up: Pound weakens further on political uncertainty, Brazil and Argentine peso weaker

Sterling reeled on Wednesday, amid another wave of buying in the US dollar and talk in markets that the Prime Minister might be about to face a leadership challenge over her Brexit strategy.

As of 2055 BST, the US dollar spot index was climbing by 0.46% to 96.4050 and just off the 52-week high it had reached on 14 August, while cable was off by 0.81% to 1.28785.

The pound was even lower against the European single currency, dipping by 0.09% to 1.1323, even as Italian officials dug in their heels as regards Brussels calls for it to modify its budget proposals and despite the release of very weak survey readings on the euro area economy.

On that note, IHS Markit's so-called 'composite' Purchasing Managers' Index for Eurozone output in manufacturing and services fell from a reading of 54.1 for September to 52.7 in October - a 25-month low.

It was also far weaker than the 54.0 reading the consensus had penciled-in.

The survey compiler blamed the export-led slowdown for the weak print, saying that it was continuing to spread out into services. Yet notably, price pressures remained near seven-year highs.

Against that backdrop, euro/dollar was also down sharply, albeit by less than the pound, dropping 0.74% to 1.13861.

Against the yen on the other hand, the US dollar was trading on the back foot, slipping 0.06% to 112.381.

Significantly, it was also lower against the Canadian Loonie, retreating by 0.55% at 1.30140, after Bank of Canada hiked its main policy rate by 25 basis points to 1.75% - as expected - and removed the word "gradual" from its policy guidance.

In the emerging market space meanwhile, the US dollar was slightly stronger versus China's yuan, adding 0.09% to 6.9440, and by 0.05% versus the Russian rouble at 65.5486.

Against the Brazilian real on the other hand, the Greenback strengthened by 1.36% to 3.7450 and on its cross with the Argentine peso by 1.22% to 37.0449.

It did however depreciate against the Turkish lira, weakening by 0.48% to 5.7125.