Ster­ling slumps after Brexit timetable out­lined

The Sun (Malaysia) - - MEDIA & MARKETING -

LON­DON: The Bri­tish pound slumped to a three-year low against the euro yes­ter­day in re­ac­tion to news that Bri­tain would be­gin Brexit ne­go­ti­a­tions by March.

How­ever, bet­ter-than-ex­pected Bri­tish man­u­fac­tur­ing data, iron­i­cally thanks to re­cent strong falls for the pound, helped Lon­don’s bench­mark FTSE 100 stocks in­dex to jump by more than 1.0% in midafter­noon trade.

Ster­ling dropped to 87.42 pence against the euro, the low­est level since Au­gust 2013, after Bri­tish Prime Min­is­ter Theresa May gave more de­tails over the week­end about how Bri­tain would exit the Euro­pean Union (EU).

The pound also slid to a three­month low of US$1.2846 be­fore re­cov­er­ing against the dol­lar later in the day.

“The news that Ar­ti­cle 50 will be trig­gered in the not too dis­tant fu­ture has caused the pound to slump ... and seen stocks rally,” said XTB mar­ket an­a­lyst David Cheetham.

Bri­tish fi­nance min­is­ter Philip Ham­mond vowed yes­ter­day to pro­tect the econ­omy from any tur­bu­lence dur­ing ne­go­ti­a­tions to leave the EU. He sought to re­as­sure busi­nesses and con­sumers that he would act to if needed.

“Through­out the ne­go­ti­at­ing process, we are ready to take what­ever steps are nec­es­sary to pro­tect this econ­omy from tur­bu­lence,” Ham­mond told the Con­ser­va­tives’ an­nual con­fer­ence in Birm­ing­ham.

The pound has faced se­vere pres­sure on cur­rency mar­kets since Bri­tain voted in June to leave the EU – hand­ing a boost to the coun­try’s ex­porters.

In a key in­di­ca­tor of the strength of the man­u­fac­tur­ing sec­tor, the Markit/CIPS UK man­u­fac­tur­ing PMI (pur­chas­ing man­agers’ in­dex) rose to its high­est level since mid-2014, ac­cord­ing to fig­ures out yes­ter­day.

“It is ... ap­par­ent that ster­ling’s marked weak­en­ing is giv­ing an im­por­tant lift to for­eign de­mand for UK man­u­fac­tured goods,” said Howard Archer, chief Euro­pean econ­o­mist at IHS Global In­sight.

The pound struck a 31-year low against the dol­lar in the im­me­di­ate wake of the Brexit vote, at US$1.2798.

May told her Con­ser­va­tive Party’s an­nual con­fer­ence on Sun­day that she was de­ter­mined to move on with the process and win the “right deal”, in a move to ease fears in­side the party that she might de­lay the di­vorce.

May said she would in­voke Ar­ti­cle 50 no later than the end of March next year, re­fer­ring to the EU’s Lis­bon Treaty that for­mally puts the di­vorce pro­ceed­ings be­tween the EU and Bri­tain in place.

This means she kicks off the ne­go­ti­a­tions process be­fore the French and Ger­man elec­tions next year and im­plies the two-year Brexit clock trig­gered un­der Ar­ti­cle 50 will wind down by March 2019, a year be­fore Bri­tain’s next gen­eral elec­tion. – AFP, Reuters


An em­ployee counts pound notes at Kasiko­rn­bank in Bangkok.

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