Pound surges on Brexit rul­ing, US poll fears

Kuwait Times - - BUSINESS -

LONDON:

Bri­tain’s pound leapt to $1.25 yes­ter­day, one day af­ter judges ruled London needed par­lia­men­tary ap­proval to trig­ger Brexit, as the dol­lar and world stocks were rocked by US vote fears.

Ster­ling hit a level last seen on Oc­to­ber 7 as Prime Min­is­ter Theresa May told Euro­pean lead­ers that her March dead­line for trig­ger­ing Brexit ne­go­ti­a­tions “re­mains un­changed”-de­spite growing wor­ries that the rul­ing could de­lay Bri­tain’s EU exit.

Mean­while, of­fi­cial data showed that the US econ­omy added a solid 161,000 jobs in Oc­to­ber while the un­em­ploy­ment rate fell to 4.9 per­cent. “The High Court rul­ing has in­tro­duced a whole new set of po­lit­i­cal un­cer­tain­ties,” Rabobank an­a­lyst Jane Fo­ley said. “How­ever, since most of these are seen as re­duc­ing the chances of a bit­ter di­vorce from the Euro­pean Union’s sin­gle market, the pound is bet­ter sup­ported. “While US la­bor data has brought a di­ver­sion, the dol­lar is also pre-oc­cu­pied by pol­i­tics. A Trump vic­tory on Novem­ber 8 could send the pound soar­ing.”

Trad­ing floors around the world have been plunged into tur­moil this week as Demo­crat Hil­lary Clin­ton’s lead over Repub­li­can Donald Trump has been slashed days before the Novem­ber 8 elec­tion.

Mean­while Thurs­day, Bank of Eng­land gover­nor Mark Car­ney warned that the rul­ing for a par­lia­men­tary vote on Ar­ti­cle 50 was part of the “un­cer­tainty” aris­ing from Brexit, af­ter the in­sti­tu­tion held Bri­tish in­ter­est rates at 0.25 per­cent. “It is a sign of just how fear­ful in­vestors are that the pound, the market’s most per­sis­tent vic­tim in the past few months, has been al­lowed to graze $1.25 against the dol­lar,” Spreadex an­a­lyst Con­nor Camp­bell added. “Of course, ster­ling is still ben­e­fit­ing from the Ar­ti­cle 50 rul­ing and Bank of Eng­land in­ac­tion from Thurs­day; how­ever, that only car­ried it so far ... sug­gest­ing that this ex­tra burst of en­ergy is stem­ming from con­cerns over which way Amer­ica will vote next week.”

Full-on panic mode

Euro­pean stocks swung sharply lower on per­sis­tent fears that mav­er­ick US ty­coon Trump could win next week’s elec­tion and beat market fa­vorite Clin­ton. Frank­furt shed 0.7 per­cent, London was down 1.5 per­cent and Paris shed 0.9 per­cent in value.

“What started as a few jit­ters mor­phed into a ful­lon panic at­tack this Fri­day, the Euro­pean in­dices plung­ing at the prospect of Trump mov­ing into the White House,” noted Camp­bell, adding Euro­pean sen­ti­ment was also hit by dis­ap­point­ing ser­vices data. Wall Street opened flat af­ter the jobs data, with the Dow slip­ping less than 0.1 per­cent. A sharp fall in Tokyo also spurred fresh losses in world stock mar­kets on Fri­day, while precious metal gold main­tained its ap­peal as a safe store of value in times of un­cer­tainty. For­mer sec­re­tary of state Clin­ton is con­sid­ered by most in­vestors to be a safer, more sta­ble bet than Trump, who is seen as a loose can­non, with poli­cies many fear could wreck the world’s top econ­omy. The search for safety has also sent traders into gold, which struck $1,307.25 per ounce yes­ter­day.—AFP

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