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Pound rallies on Brexit delay hopes before ‘no deal’ vote
NEW YORK, March 14, 2019 (BSS/AFP) – The British pound recovered strongly
Wednesday as traders were increasingly confident Britain’s exit from the EU
will be pushed beyond the current March 29 deadline.
Sterling’s rebound came as British lawmakers voted to reject a no-deal
exit from the single market — having also this week voted down the deal
negotiated by Prime Minister Theresa May.
Yet another vote will determine whether London should ask the EU for more
time beyond March 29 to sort out its departure from the bloc.
“The potential delay of Brexit is what is helping to hold up the pound,
but by the same token, the uncertainty is limiting its upside potential,”
said Fawad Razaqzada at Forex.com.
“If it feels like the UK government is going around in circles, it is
because it is,” he added.
As the European trading day wore on, the pound rose more than two percent
against the dollar on the day.
The pound and the FTSE held up even as Britain’s finance minister Philip
Hammond slashed the forecast for economic growth this year due to Brexit
uncertainty to 1.2 percent, down October’s 1.6 percent forecast.
– No rate hike on horizon –
Meanwhile, in New York, investors threw caution to the wind, rallying to
new heights for the year despite the Brexit turmoil and US officials’
decision to ground the top-selling aircraft of Dow-member Boeing.
Investors also were cheered by economic data showing the US manufacturing
sector had a boost in January and wholesale inflation remained tame in
February.
Shares in Boeing clambered back into the green for the day after President
Donald Trump announced the US decision on the 737 MAX aircraft line, rising
0.5 percent to $377.12, putting it up for the first time in three days but
still down nearly 11 percent since before Sunday’s deadly crash in Ethiopia.
The Dow, where Boeing’s shares are heavily weighted, rose by triple
digits, closing up 0.6 percent. The broader S&P 500 and tech-heavy Nasdaq
both added 0.7 percent to close at fresh highs for 2019.
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Analysts said the markets’ indifference to multiple apparent dangers on
the horizon — including weakening corporate revenues, a slowing global
economy and Brexit — was because central banks had clearly signaled a pause
on interest rate increases.
“Overall, part of the answer is we have a Fed that has made it clear that
they do not expect to raise rates in the short term or mid-term,” Quincy
Krosby of Prudential Financial told AFP.
“Right now, the market does not see a rate hike this year.”
Oil was also well-bid, with the US benchmark WTI contract reaching a
multi-month high, driven by falling American stocks and global supply
uncertainty.
– Key figures around 2100 GMT –
Pound/dollar: UP at $1.3339 from $1.3062 at 2100 GMT on Tuesday
Euro/pound: DOWN at 85.00 pence from 86.46 pence
Euro/dollar: UP at $1.1334 from $1.1292
Dollar/yen: DOWN at 111.17 yen from 111.29 yen
New York – DOW: UP 0.6 percent at 25,702.89 (close)
New York – S&P 500: UP 0.7 percent at 2,810.92 (close)
New York – Nasdaq: UP 0.7 percent at 7,643.41 (close)
London – FTSE 100: UP 0.1 percent at 7,159.19 points (close)
Frankfurt – DAX 30: UP 0.4 percent at 11,572.41 (close)
Paris – CAC 40: UP 0.7 percent at 5,306.38 (close)
EURO STOXX 50: UP 0.6 percent at 3,323.45 (close)
Tokyo – Nikkei 225: DOWN 1.0 percent at 21,290.24 (close)
Hong Kong – Hang Seng: DOWN 0.4 percent at 28,807.45 (close)
Shanghai – Composite: DOWN 1.1 percent at 3,026.95 (close)
Oil – Brent Crude: UP 88 cents at $67.55
Oil – West Texas Intermediate: UP $1.37 cents at $58.26
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