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Sterling edges lower for a fifth day on trade war fears

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Sterling edges lower for a fifth day on trade war fears
Pound coins are seen in this photo illustration taken in Manchester, Britain September 6, 2017. REUTERS/Phil Noble/Illustration   -   Copyright  PHIL NOBLE(Reuters)
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LONDON (Reuters) – Sterling edged lower for a fifth consecutive day as a resurgent dollar and mounting concerns over Brexit negotiations sapped demand for the British currency.

As fears grew that the United States may be preparing to go ahead with imposing a 25 percent tariff on $200 billion (£155.48 billion) of Chinese goods when a public consultation period ends on Thursday, the dollar advanced against its major rivals and emerging market currencies.

An overnight bounce in the pound after a report that the European Union could offer new guarantees to Britain to win London’s support for a solution aimed at avoiding a hard Irish border after Brexit faded on Wednesday as investors focused on the spreading selloff in emerging markets.

On Wednesday, the British currency <GBP=D3> edged 0.2 percent lower at $1.2829, falling for the fifth consecutive day and taking its cumulative losses to more than 1 percent so far this month.

The pound has weakened after hitting a near one-month high at $1.3043 at the end of August on weak economic data, doubts over Prime Minister Theresa May’s leadership and opposition from the European Union to Britain’s proposals for exiting the bloc.

Data this week has also weighed on sterling with a survey showing weaker than expected growth in Britain’s construction sector in August also hurting demand. Services PMI is due on Wednesday.

“If today’s services PMI prints lower as well, then the pound will find it hard to extend its overnight gains and with the strong dollar before non-farm payrolls, sterling could revisit its $1.28 lows and break below,” said Konstantinos Anthis, head of research at ADSS.

(Reporting by Saikat Chatterjee; Editing by Keith Weir)

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