Pound resumes slide at start of key Brexit week

Pound resumes slide at start of key Brexit week

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

European stock markets also retreated as weak Chinese data offset a partial trade deal between China and the United States, analysts said.

Asian investors had earlier on Monday saluted the trade deal, sending regional equity markets rallying, though observers were sceptical about the overall significance of the agreement.

Official data meanwhile showed Chinese imports and exports fell more than forecast in September, as US tariffs and cooling demand at home and abroad hit trade in the world's second largest economy.

The figures weighed heavily on the oil market, with crude futures slumping around two percent. They had surged Friday, fuelled by a blast on an Iranian tanker and news of the US-China deal.

"Although the US and China made some progress late last week and President Trump suspended tariffs due to come in in mid-October, the damage from the existing trade restrictions is being felt," noted Fiona Cincotta, senior market analyst at City Index trading group.

She added: "The pound has dropped like a stone overnight after Brexit negotiations didn't lead to any significant progress over the weekend."

Sterling rallied late last week after British Prime Minister Boris Johnson and his Irish counterpart Leo Varadkar said after meeting that they could see a "pathway" to reaching a Brexit deal.

But European officials on Sunday said obstacles remained on how to manage trade and customs between EU-member Ireland and Northern Ireland, which is a part of the United Kingdom.

Time is running out to sign off on any deal at an Oct 17-18 European Union summit, the last such meeting before Britain's scheduled departure from the European Union at the end of the month.

Sterling "is in the red as dealers are less hopeful that a deal will be struck between the UK and the EU," said David Madden, analyst at CMC Markets UK.

"Sterling enjoyed a massive rally at the back end of last week due to optimism surrounding the Brexit talks, but now the Northern Ireland-customs union roadblock has popped up again," he said, adding the possibility of Britain requesting an extension has helped avoid further losses.

Wall Street was mixed in late morning trading, with trading volumes low on the Columbus Day holiday.

Key figures around 1530 GMT:

Pound/dollar: DOWN at US$1.2583 from US$1.2645 at 2050 GMT on Friday

Euro/pound: UP at 87.37 pence from 87.26 pence

Euro/dollar: DOWN at US$1.1028 from US$1.1035

Dollar/yen: DOWN at 108.38 yen from 108.39 yen

London - FTSE 100: DOWN 0.5 per cent at 7,213.45 points (close)

Paris - CAC 40: DOWN 0.4 per cent at 5,643.08 (close)

Frankfurt - DAX 30: DOWN 0.2 per cent at 12,486.56 (close)

EURO STOXX 50: DOWN 0.4 per cent at 3,554.73

Hong Kong - Hang Seng: UP 0.8 per cent at 26,521.85 (close)

Shanghai - Composite: UP 1.2 per cent at 3,007.88 (close)

Tokyo - Nikkei 225: Closed for a public holiday

Brent North Sea crude: DOWN 2.6 per cent at US$58.91 per barrel

West Texas Intermediate: DOWN 2.7 per cent at US$53.20 per barrel

Source: AFP/de

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