Pound takes a beat­ing as Tory lead crum­bles

Theresa May’s gam­ble back­fires and UK cur­rency tum­bles

The Star Early Edition - - INTERNATIONAL - Samuel Pot­ter

THE POUND tum­bled as the UK’s rul­ing Con­ser­va­tive Party lost its par­lia­men­tary ma­jor­ity, plung­ing the coun­try into un­cer­tainty just days be­fore Brexit ne­go­ti­a­tions were due to start. Crude ad­vanced and the dol­lar strength­ened.

Ster­ling dropped the most in five months as the elec­tion in­tended to strengthen Prime Min­is­ter Theresa May’s hand in ne­go­ti­a­tions with the EU in­stead left her bat­tling to sur­vive. The cur­rency’s re­treat gave the Bri­tish bench­mark stock in­dex a boost, but the elec­tion’s im­pact be­yond the UK was muted. The euro ex­tended losses to three days, and the Stoxx Europe 600 In­dex fluc­tu­ated.

While fall­out from the elec­tion is roil­ing Bri­tish as­sets, in­vestors may be re­lieved about its lim­ited im­pact elsewhere. The vote capped a se­ries of major events this week that had the po­ten­tial to change the tone of fi­nan­cial mar­kets glob­ally, most of which passed with rel­a­tively lit­tle fuss. At­ten­tion will now turn to the week ahead, when the Fed is ex­pected to raise in­ter­est rates and the Bank of Eng­land, the Bank of Ja­pan and the Swiss Na­tional Bank also meet.

“For now, the re­sults of the UK elec­tions do not ap­pear to be threat­en­ing the global growth story,” Mark Hae­fele, global chief in­vest­ment of­fi­cer at UBS Group, said. But for Bri­tain, “po­lit­i­cal un­cer­tainty is likely to more than off­set any ben­e­fit from a marginally weaker pound,” he said. – Bloomberg

PHOTO: BLOOMBERG

Stock mar­ket in­for­ma­tion is dis­played on an elec­tronic screen on the trad­ing floor at ETX Cap­i­tal in Lon­don as the po­lit­i­cal un­cer­tainty in the UK con­tin­ues.

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