Currency markets were muted early Friday, recovering from a tumultuous previous trading day that saw the British pound log its worst one-day performance in more than two years though uncertainties over Brexit remain.
The ICE U.S. Dollar Index DXY, -0.15% was little changed in positive territory at 96.961, on track for a modest 0.1% gain on the week. In terms of U.S. data, October industrial production and capacity utilization are due at 9.15 a.m. Eastern.
The British pound GBPUSD, +0.3679% bounced back from the sharp loss it incurred Thursday on the back of further government resignations over Brexit. Sterling, which logged its worst performance since October 2016 on Thursday, according to Dow Jones Data Group, was up at $1.2815, up from $1.2774.
Michael Gove, Secretary of State for the Environment, Food and Rural Affairs, who is tipped to replace Dominic Raab as Brexit Secretary after Raab handed in his resignation Thursday, said he was committed to getting the deal right. During the pound selloff, there had been speculation that Gove could resign as well. If he takes on the position, he will be the third chief Brexit negotiator since the U.K. voted to leave the European Union in June 2016.
Check out: These are the latest resignations from the U.K. government that rattled investors
But new Brexit secretary or not, the outlook remains uncertain after multiple calls for a vote of no confidence in Prime Minister Theresa May were made Thursday. Investors are also concerned about the likelihood of May getting an agreement with Brussels through parliament in next month’s Brexit bill vote. In case of a “no” vote, the options would be a “no-deal” Brexit, new elections or a second referendum.
Don’t miss: Here’s how much Brexit turmoil might whack the British pound, analysts predict
In continental Europe, the euro EURUSD, +0.0706% last bought $1.1335, slightly up from $1.1332 late Thursday in New York.
Versus the pound, the shared eurozone currency EURGBP, -0.2368% slipped 0.3% to buy £0.8845.
Harmonized eurozone inflation increased 2.2%, in line with expectations, year-over-year in October, while core inflation stood at 1.1% over the same period. European Central Bank President Mario Draghi said in a speech earlier that eurozone inflation could be negatively affected by businesses dealing with uncertainties. The ECB is expected to begin raising interest rates, for which rising inflation is a key condition, around summer next year.
Speaking of interest rates, Mexico’s central bank upped its key rate by 25 basis points to 8% Thursday, in line with consensus expectations. Mexico’s peso USDMXN, +0.6199% is a popular emerging market currencies, in part due to its high local interest rates. One dollar last bought 20.3491 pesos, versus 20.2293 pesos late Thursday.
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