By William Watts, MarketWatch

China central bank won't let yuan fall past 7 to dollar: report

The British pound remained in the spotlight Friday, extending a decline versus major rivals after talks between the U.K.'s two main political parties collapsed without an agreement on how to pursue the country's exit from the European Union.

The Japanese yen, meanwhile, gained ground on apparent haven-related buying as worries over the U.S.-China trade battle pressured global equity markets (http://www.marketwatch.com/story/stock-index-futures-point-lower-putting-rebound-in-danger-after-china-casts-doubt-on-further-trade-talks-2019-05-17).

The British pound fell to a four-month low versus the U.S. dollar to change hands Friday morning at $1.2741, down from $1.2847 in New York trading hours late Thursday. The euro rose 0.3% to 87.66 pence.

"Markets are converging on a scenario of May's early exit and her replacement with a pro-Brexit PM and, implicitly, a growing risk of no deal exit and GBP weakness as a result," said Adam Cole, chief currency strategist at RBC Capital Markets, in a note.

Six weeks of talks between Prime Minister Theresa May's Conservative party and Labour, led by Jeremy Corbyn, ended without agreement on Friday. May will now make a fourth attempt to win support for her exit agreement with the EU. Another defeat would be expected to lead to her resignation. May, under pressure from Conservative lawmakers, agreed Thursday to make plans to in mid-June to choose her successor.

Brexit Brief:Cross-party talks called off as rejection of May's deal looms (http://www.marketwatch.com/story/brexit-brief-cross-party-talks-in-doubt-as-rejection-of-mays-deal-looms-2019-05-17)

(http://www.marketwatch.com/story/brexit-brief-cross-party-talks-in-doubt-as-rejection-of-mays-deal-looms-2019-05-17)The ICE U.S. Dollar Index , a measure of the U.S. currency against a basket of six major rivals was up 0.1% at 97.905. The euro was slightly lower versus the U.S. unit at $1.1171 versus its level late Thursday at $1.1204.

Against the yen, one dollar fetched Yen109.51, down slightly from Yen109.59. The euro was off 0.4% against the Japanese currency at Yen122.33.

China's yuan fell to its lowest level versus the dollar since December on Friday. The U.S. bought 6.9142 yuan. The dollar was 0.2% higher versus the currency in offshore trade at 6.9442 yuan.

Reuters, citing unnamed sources, reported that China's central bank would use foreign exchange intervention and monetary policy tools (https://www.reuters.com/article/china-markets-yuan-pboc/chinas-cbank-will-not-let-yuan-decline-past-7-to-the-dollar-sources-idUSL4N22T0W5) to make sure the yuan doesn't weaken past 7-per-dollar in the immediate term.

(END) Dow Jones Newswires

May 17, 2019 08:52 ET (12:52 GMT)