Bahrain
Kuwait
Oman
Middle East
GDN Online App available on
App Store / Play Store
Gulf Daily News Gulf Daily News
Gulf Daily News Gulf Daily News Gulf Daily News Gulf Daily News Gulf Daily News
Wednesday, November 21, 2018 ARCHIVES  |  SEARCH  |  POST ADS  |  ADVERTISE  |  SUBSCRIBE   |  LOGIN   |  CONTACT US

Pound tanks on Brexit fear as Asia markets retreat

International Business
Mon, 16 Jan 2017
AFP


Hong Kong: The pound struggled at 32-year lows against the dollar in Asia on Monday after reports said British Prime Minister Theresa May was ready to take the country out of the European Union in a so-called "hard Brexit".

Sterling's retreat came with losses on most Asian stock markets as investors nervously await Donald Trump's inauguration speech on Friday, having been left disappointed at his lack of detail on economic policy at a news conference last week.

A number of Sunday newspapers in the UK said May was willing to pull out of the single market, the European customs union and the European Court of Justice, in order to regain control of immigration.

The news sent sterling plunging to $1.1986, its lowest since October's "flash crash" that sent it to $1.1841 -- a level not seen since the start of 1985.

The unit later pared some of the losses to sit just above $1.20.

"The weekend reports were undoubtedly the factor that pushed the pound down," said Nomura forex strategist Yoshitaka Suda. "Markets are watching what Britain does."

The reports come as May prepares to give a speech Tuesday on the government's strategy on leaving the EU.

The PM aims to launch two years of departure talks when she triggers the Article 50 exit process by the end of March, although a legal challenge is still pending before the country's Supreme Court.

"Even if the pound recovers somewhat in London, it seems as though the realities of a hard Brexit are still not fully priced in," Sean Callow, senior strategist at Westpac Banking Corp. in Sydney, told Bloomberg News.

"It is difficult to make the case for the pound to avoid testing, probably breaking, the 'flash crash' lows in coming weeks."

Regional stock markets were also under pressure as dealers look ahead to Trump's inauguration Friday with uncertainty.

World equities surged after his election win in November on bets his plans for big infrastructure spending and tax cuts would fire the world's top economy, and in turn the global economy.

But the lack of any definitive plan at last week's briefing left many scratching their heads and worrying he might not fulfill his promises.

Tokyo ended one per cent lower as a pick-up in the yen against the dollar hit exporters, while Hong Kong also shed one per cent. Shanghai ended down 0.3 per cent.

Seoul lost 0.6 per cent, Singapore retreated 0.7 per cent and Taipei slipped 0.9 per cent, although Sydney edged up 0.5 per cent.

In early European trade London rose 0.2 per cent on the back of the weaker pound, but Paris fell 0.5 per cent and Frankfurt lost 0.6 per cent.

Tokyo - Nikkei 225: DOWN 1.0 per cent at 19,095.24 (close)

Shanghai - Composite: DOWN 0.3 per cent at 3,103.43 (close)

Hong Kong - Hang Seng: DOWN 1.0 per cent at 22,718.15 (close)

London - FTSE 100: UP 0.2 per cent at 7,352.71

Pound/dollar: DOWN at $1.2030 from $1.2190

Euro/dollar: DOWN at $1.0612 from $1.0639

Dollar/yen: DOWN at 114.00 yen from 114.53 yen

Oil - West Texas Intermediate: UP six cents at $52.43 per barrel

Oil - Brent North Sea: UP six cents at $55.51

New York - Dow: FLAT at 19,911.40 (close)