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China's foreign exchange unexpectedly gained in May after a drop in April, which indicates the central banks invested to cushion the fall in the Yuan over the US trade talks.
The country's foreign exchange reserves gained to $3.101 trillion in May. Many factors are responsible for the rise in reserves, like the change in asset price and the changes in the valuation.
After the Sino-US trade tensions, the pressure on China's currency increased in April when the US increased tariffs, and China retaliated with higher duties.
In New York, the US dollar remained almost unchanged against the Euro before the G20 summit expected to be held in the next month in Japan.
It is assumed the meeting of the Fed on June 18 / June 19 may not result in rate cuts, but investors need to carefully examine the new signals where a new cut can arrive in July.
Overall, the global slowdown risk has been creating anxieties, and the US president is speculating a series of tariffs on other trade partners, Europe and Japan.
The increasing trade tensions raise risks globally where the Eurozone is already under pressure, and the UK is facing Brexit, which can cause a prolonged phase of slow growth globally [as suggested by the IMF MD Christine Lagarde].
The British pound fell sharply since the March delay in the Exit plan from the EU, where the activity in the currency remained the lowest since 2016. The average turnover of sterling declined by $249.5 billion in May, which was the lowest since 2019 [ as per the data of CLS].
The future exchange was hit by the uncertainties created by Brexit postponement to October 31, and the daily volume of the trade of sterling/ dollar was down by 18 per cent in May 2019 compared to the same month last year.
Experts say Brexit created uncertainty where the delay to October led to a decline in transactions in the currency that can pick up in the last weeks of September. However, the trade may remain highly volatile.
The traders wait to see the impact of renegotiation and breaks in the deadlock before October.
The data released by the ONS on Monday indicate an economic slowdown in the UK as the economy contracted 0.4 per cent in April 2019 - which led to a decline in the pound-to-Euro exchange rate. The Pound dollar exchange also fell, even though
the report states the economy shrank in April by almost 0.4 per cent, but in the last three months before April, it grew at the rate of 0.3 per cent. Such data increased pressure on the sterling, struggling with political uncertainties.
The Bank of England's latest predictions on Brexit claim, in the case of no-deal, the economy may suffer substantially.
Although the first quarter was highly supportive, GDP fell sharply in April over the car factory shutdowns, but this has been rejected as temporary fluctuations in the economy, at the same time, as the Brexit-related uncertainty continues to hit business investment.
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