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Sterling falls near 31-year low, dollar rises on data

Dan Kitwood | Getty Images

Sterling fell on Monday near a 31-year low against the dollar and to a three-year low versus the euro after a March deadline was set for the start of the formal process that will split Britain from the European Union.

The dollar strengthened against a basket of currencies on a private report that showed the U.S. manufacturing sector returned to expansion territory in September.

Among emerging markets, the Colombia peso shed as much as 3 percent against the greenback after voters on Sunday rejected a peace deal with Marxist FARC rebels, raising worries about the nation's credit ratings and ability to embark on tax reforms.

The problems with a soft Brexit

As Colombians voted on Sunday, British Prime Minister Theresa May told her Conservative party's annual conference that she was determined to move on with Brexit and win the "right deal" in an effort to ease fears inside her party that she may delay the split with the EU.

"That caught the market by surprise with some people still hoping Brexit won't happen," said Mazen Issa, senior FX strategist at TD Securities in New York. With the timeline set to trigger Article 50 of the EU's Lisbon Treaty, Britain would redefine its ties with Europe, its biggest trading partner.

May's Brexit comments came after the pound posted its worst run of quarterly losses since 1984.

It dropped more than 1 percent against the dollar to as low as $1.2818. That left it less than half a cent away from the 31-year low it reached in early July, shortly after the June 23 vote to leave the EU. Sterling also shed 0.8 percent against the euro at 87.28 pence after it hit 87.48 pence, its weakest since August 2013.

Settlement looming for Deutsche Bank


The greenback enjoyed a modest rise in light trading as some European and Asian markets were closed for holidays.

The dollar index was up 0.3 percent at 95.747 after the Institute for Supply Management said its barometer on U.S. factory activity rose to 51.5 in September, above the 49.4 in August and 50.5 forecast among economists polled by Reuters.

A reading above 50 indicates the manufacturing sector is growing.

While the overall ISM reading on factory activity was encouraging, it was not enough to raise expectations the U.S. economy is picking up steam. "It's not runaway support for the dollar," TD's Issa said.

Meanwhile, the Colombian peso tumbled to its weakest level against the dollar in two weeks after Sunday's referendum on a peace deal between the government and FARC guerrillas.

Any renegotiated agreement now seems to depend on whether the FARC could accept some tougher sanctions against them.

The Colombian peso was last down 1.8 percent at 2,932 to the dollar.