Pound plunges over Brexit tur­bu­lence

The Myanmar Times - - Business -

THE pound slumped to a 31-year low against the dol­lar yes­ter­day on con­cerns over the tim­ing of Bri­tain’s planned exit from the Euro­pean Union, ac­cord­ing to traders.

Bri­tain’s cur­rency also struck a fresh three-year low point against the euro, while the drops helped pushed Lon­don’s bench­mark FTSE 100 stocks in­dex up to a 16-month high be­yond 7000 points at the open.

The pound struck $1.2757 – the low­est since 1985 – early yes­ter­day. It traded at 87.56 pence to the euro – its weak­est level since 2013.

The cur­rency has been on a down­ward spi­ral since Prime Min­is­ter Theresa May said Bri­tain will trig­ger Brexit ne­go­ti­a­tions by the end of March and her finance min­is­ter warned of “tur­bu­lence”.

Finance Min­is­ter Philip Ham­mond said dur­ing the Con­ser­va­tive Party con­fer­ence in Birm­ing­ham, cen­tral Eng­land, that peo­ple should ex­pect “some tur­bu­lence as we go through this ne­go­ti­at­ing process”.

Mr Ham­mond, who like Ms May cam­paigned for Bri­tain to stay in the EU, said that con­sumer and busi­ness con­fi­dence could go up and down like a “roller­coaster”.

His com­ments came the day af­ter Ms May re­vealed when Bri­tain would start the two-year exit process, putting it on track to leave by early 2019.

The new premier, who took power in July af­ter David Cameron quit fol­low­ing the Brexit vote, also in­di­cated will­ing­ness to leave the sin­gle mar­ket in or­der to se­cure control over im­mi­gra­tion from the EU.

EU states have sig­nalled they will take a tough line and not offer Bri­tain any spe­cial treat­ment in the talks, warn­ing that mem­ber­ship of the sin­gle mar­ket would en­tail al­low­ing free­dom of move­ment.

“It is gen­er­ally con­sid­ered that the more May in­sists on im­mi­gra­tion control, the more the EU is likely to close ac­cess to the sin­gle mar­ket,” an anal­y­sis by Rabobank Fi­nan­cial Mar­kets Re­search said.

Bri­tain’s econ­omy has per­formed more strongly than some an­a­lysts ex­pected in the af­ter­math of June’s sur­prise Brexit vote.

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.

How­ever, many ma­jor em­ploy­ers are re­luc­tant to make long-term in­vest­ment de­ci­sions due to Brexit.

Last week, car­maker Nis­san’s chief ex­ec­u­tive Car­los Ghosn said it was de­lay­ing new in­vest­ment at its gi­ant plant in Sun­der­land, an­nounc­ing, “We can­not stay if the con­di­tions do not jus­tify that we stay.”

Mr Ham­mond is seen as a pro­po­nent of a more grad­ual “soft Brexit” that would re­tain ac­cess to the EU’s sin­gle mar­ket, while other “hard Brexit” pro­po­nents in Ms May’s cab­i­net want a clean break with the EU.

He has sig­nalled a break with pre­de­ces­sor Ge­orge Os­borne’s goal of elim­i­nat­ing Bri­tain’s deficit by 2019-20 and has not set an al­ter­na­tive timetable for bal­anc­ing the books.

Mr Ham­mond is pledg­ing more in­vest­ment, in­clud­ing the launch of a £3 bil­lion fund to build more than 200,000 new homes. –

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