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Pound volatile at start of hectic Brexit week

Pound volatile at start of hectic Brexit week

The British pound fell against the euro and dollar on Oct 14, the start of a pivotal week for Britain and the European Union to strike a Brexit deal. (AFP/PAUL ELLIS)

LONDON: The British pound see-sawed on Monday (Mar 11) as traders jockeyed for position on the eve of another critical parliamentary vote for Prime Minister Theresa May.

The UK currency kicked off the trading cycle in Asia by tanking to its lowest level since Feb 19 at US$1.2949, but then bounced back in the European day - with analysts trying to guess where it may head next.

"The foreign exchange market thinks tomorrow's (Brexit) meaningful vote is a big deal and expects volatility sooner rather than later," said Chris Turner, global head of strategy at ING.

As British MPs prepare to vote again on the divorce deal on Tuesday, the prime minister appears to have little to show for her recent efforts, prompting warnings of another humiliating defeat.

"We are 24-hours away from May's supposed 'meaningful' Brexit vote and the rumour is that (she) could lose this vote by a wider margin than the last one," said Oanda analyst Dean Popplewell. "As expected, sterling remains volatile".

'VALIANTLY TRYING'

May was, however, expected on Monday to travel to Strasbourg in a last bid to win a breakthrough deal.

"Though the Prime Minister is still valiantly trying to negotiate some last minute changes with the EU, she is neither making progress in Brussels nor at home," said City Index analyst Fiona Cincotta.

"The choice for MPs will be either a hard Brexit or postponing this date, and the latter option seems to be gathering more momentum."

World stock markets meanwhile clocked up gains on Monday, including London although the FTSE was held back somewhat by sterling's rebound.

"Global stocks are climbing at the start of the week, after reassuring comments from Fed Chair Powell and on signs that the US and China are nearing a trade deal," said Dean Popplewell at OANDA.

US Federal Reserve Chairman Jerome Powell, who has faced bitter criticism from Donald Trump, said in an interview broadcast on Sunday that the president cannot fire him.

Last year, President Donald Trump angrily and very publicly denounced the Fed's "crazy" interest rate hikes, breaking with traditional reserve from presidents toward the world's most powerful central bank.

Wall Street was also higher in the early New York afternoon, but Boeing shares were a big drag on the Dow Jones index as safety doubts over the company's best-selling 737 MAX 8 drove several carriers to ground the aircraft on Monday after a jet crashed in Ethiopia, killing all 157 people on board.

READ: Chinese carriers, Ethiopian Airlines suspend use of Boeing 737 MAX 8 aircraft after crash

As Boeing stock stood around eight per cent lower, shares in global rival Airbus rose more than one per cent, comfortably outperforming the overall Paris market where they are listed.

Key figures at 1645 GMT:

 

Pound/dollar: UP at US$1.3124 from US$1.3015 at 2200 GMT on Friday

Euro/pound: DOWN at 85.53 pence from 86.30 pence

Euro/dollar: DOWN at US$1.1227 from US$1.1235

Dollar/yen: UP at 111.27 yen from 111.17 yen

 

London - FTSE 100: UP 0.4 per cent at 7,130.62 points (close)

Frankfurt - DAX 30: UP 0.8 per cent at 11,543.48 (close)

Paris - CAC 40: UP 0.7 per cent at 5,265.96 (close)

EURO STOXX 50: UP 0.6 per cent at 3,304.44

New York - Dow: UP 0.3 per cent at 25,524.91

 

Tokyo - Nikkei 225: UP 0.5 per cent at 21,125.09 (close)

Hong Kong - Hang Seng: UP 1.0 per cent at 28,503.30 (close)

Shanghai - Composite: UP 1.9 per cent at 3,026.99 (close)

 

Oil - Brent Crude: UP 51 cents at US$66.25 per barrel

Oil - West Texas Intermediate: UP 45 cents at US$56.52 per barrel

Source: AFP/de

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