Ster­ling bounces off low as MPs flex Brexit mus­cles

Kuwait Times - - BUSINESS -

Ster­ling re­bounded from a record low in trade-weighted terms yes­ter­day af­ter Bri­tain’s prime min­is­ter said she would give law­mak­ers some scru­tiny of the Brexit process and would seek “max­i­mum pos­si­ble ac­cess” to Europe’s sin­gle market. The pound surged by as much as 1.5 per­cent against the dol­lar and the euro on the moves by May con­cern­ing a par­lia­men­tary de­bate ini­tially read as hand­ing MPs a sub­stan­tial op­por­tu­nity to un­der­mine the “hard Brexit” sce­nario that has scared in­vestors over the past fort­night.

A “hard Brexit” is seen as leav­ing Bri­tain out of Euro­pean Union’s sin­gle market and threat­en­ing Lon­don’s role as a ma­jor fi­nan­cial cen­tre. The gains eased, how­ever, around mid­day in Lon­don when May and her Brexit min­is­ter, David Davis, sounded some less con­ces­sion­ary notes in a pair of ap­pear­ances in par­lia­ment.

To many deal­ers and an­a­lysts the gains for the pound still looked like just a brief pause af­ter four days which have sent the cur­rency to its weak­est on record, ac­cord­ing to the trade-weighted in­dex run by the Bank of Eng­land.

Against the dol­lar alone, it re­mains, at around $1.21, some way from an all-time low of just above par­ity hit in 1985. “You could say there was some kind of back­track­ing to at least al­low par­lia­ment some greater pro­file,” said Lee Hard­man, cur­rency econ­o­mist with Bank of Tokyo-Mit­subishi UFJ in Lon­don. “But you would have to be very op­ti­mistic to think that it will have a big im­pact on the process, to ex­pect that it means they will ul­ti­mately give par­lia­ment greater say.”

Ster­ling was just 0.8 per­cent higher, al­most halv­ing its gains on the day to stand just over a cent above Tues­day’s low of $1.2090.

FULL AND TRANS­PAR­ENT

The cur­rency has plunged al­most 18 per­cent against the dol­lar since Bri­tain’s shock vote in June to leave the Euro­pean Union. Af­ter a brief pe­riod of sta­bil­ity the sell-off has wors­ened again in the past fort­night on a se­ries of signs that the govern­ment would pri­ori­tise con­trols on im­mi­gra­tion over ac­cess to the Euro­pean sin­gle market. May moved late on Tues­day to ap­pease some law­mak­ers in her rul­ing Con­ser­va­tive Party by al­low­ing a mo­tion pro­posed by the op­po­si­tion Labour Party for a “full and trans­par­ent de­bate” on how the govern­ment will en­act the pub­lic vote to leave the EU. But while that agreed to de­mands for par­lia­ment to de­bate her govern­ment’s plans, it also ruled out let­ting it vote on trig­ger­ing the for­mal Brexit pro­ce­dure. Brexit Min­is­ter Davis also banged home the mes­sage that it is the govern­ment that will de­cide when to trig­ger Ar­ti­cle 50, the for­mal le­gal process for leav­ing the Euro­pean Union, be­fore be­gin­ning exit ne­go­ti­a­tions. — Reuters

LON­DON: A cur­rency ex­change board with washed out rates in Lon­don yes­ter­day. — AP

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