Forex – Dollar Rides Sterling's Slump as Brexit Threequel Vote Ends in Defeat

© Reuters. – The dollar inched higher Friday as mostly downbeat economic data did little to drown out the narrative of slowing economic growth. But a slump in the pound underpinned the greenback as Prime Minister Theresa May’s Brexit deal tasted defeat for the third-straight time.

The , which measures the greenback against a trade-weighted basket of six major currencies, rose by 0.05% to 96.81.

A trio of reports showing a rebound in new home sales, subdued inflation and weaker consumer spending, added somewhat to expectations the Federal Reserve could soon cut interest rates, which would likely exert pressure on the greenback.

The Fed’s preferred inflation measure, the personal consumption expenditures (PCE) price index, excluding food and energy, in the 12 months through January, missing the economists’ forecast of 1.9%.

Consumer spending, which accounts for more than two-thirds of U.S. economic activity, in January, the Commerce Department said.

The Commerce Department also said new home sales to a seasonally adjusted annual rate of . That beat economists’ forecasts.

“Clearly the recent drops in mortgage rates have fed through into some increased buying appetite,” BMO said in a note clients.

Average 30-year fixed-rate mortgages declined by 22 basis points from 4.28% to 4.06%, resulting in the biggest single-week decline in rates since 2008, according to Freddie Mac’s latest Primary Mortgage Survey released on Thursday.

Downside in the dollar, however, was limited by a plunge in sterling as the Withdrawal Agreement, a part of the Brexit deal, was reject by U.K. lawmakers.

Lawmakers voted 344 to 286 to reject the government’s withdrawal agreement.

The result of the vote will have “grave” implications, May said. She added: The “legal default” was that the U.K. would leave the EU on April 12.

That raised concerns that a no-deal Brexit could be on the horizon.

But the lawmakers will gather again on Monday to vote on series of options to find a way out of the current political quagmire. The possible Brexit scenarios include a new referendum, revoking Article 50, a no-deal Brexit and a general election.

fell 0.29% to $1.3006 and rose 0.035 to $1.1217.

rose 0.18% to 110.82 as Wall Street rallied amid improved risk sentiment as the S&P nears its biggest quarterly win since the third quarter of 2009.

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