Brexit tension sends pound tumbling

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Brexit tension sends pound tumbling

New York (AFP) – The pound tumbled Tuesday as Britain’s exit from the EU took a step further into the unknown, with lawmakers overwhelmingly voting to reject Prime Minister Theresa May’s Brexit deal.

Sterling suffered its sharpest losses earlier in the day, when the government’s top legal advisor, Attorney General Geoffrey Cox, said May’s last-minute changes with the EU had not changed the legal risk Britain would be “indefinitely and involuntarily” held in the so-called Irish border backstop.

“Sterling took a nosedive on the back of the Cox statement,” said ThinkMarkets analyst Naeem Aslam.

“It was his opinion which matters the most; now that he has made it clear that the recent deal has no weight, the door is wide open for sterling to move lower.”

And move lower it did: the pound slid to as low as $1.3005 from $1.3143 just before Cox published his advice. The euro jumped to 86.55 pence from 85.75 pence.

Overnight, following news of May’s hard-won EU concessions from Brussels, sterling had reached a three-week peak at $1.3289 and to 84.76 pence to the euro — a level last seen in May 2017.

London’s stock market, meanwhile, did well on Tuesday, as is often the case when sterling is weak. Frankfurt closed lower and Paris slightly up.

– Boeing crisis –

Wall Street shrugged off the Brexit chaos — which increases the chances the world’s fifth-largest economy could crash out of the European Union without a deal governing economic relations with the Continent.

US stocks swung to a split finish, with the crisis facing US aviation giant Boeing dragging down the benchmark Dow Jones Industrial Average while other indices inched higher.

Shares in Boeing fell another 6 percent, putting the stock down more than 11 percent since before Sunday’s deadly crash.

Calls mounted in the United States for aviation regulators to suspend operations of Boeing’s top-selling 737 MAX 8, which was involved in its second fatal crash in five months in Ethiopia.

So far, US officials have declined to do so, citing their ongoing investigation, as governments across the globe increasingly close their airspace to the planes or ground them.

The Dow, where Boeing is heavily weighted, fell 0.4 percent but the broader S&P 500 and tech-heavy Nasdaq rose 0.3 percent and 0.4 percent respectively.

“The transports are down. The Dow is down. That is mostly due to Boeing,” Peter Cardillo of Spartan Capital told AFP.

But Brexit, “is not having a major effect before the actual separation between the UK and the EU.”

Investors were comforted by the latest benign reading on US inflation, which fell in February to its slowest annual pace in more than two years — supporting the Federal Reserve’s recent dovish turn on interest rates.

– Key figures around 2100 GMT –

Pound/dollar: DOWN at $1.3062 from $1.3150 at 2100 GMT on Monday

Euro/pound: UP at 86.46 pence from 85.50 pence

Euro/dollar: UP at $1.1292 from $1.1245

Dollar/yen: UP at 111.29 yen from 111.21 yen

New York – DOW: DOWN 0.4 percent at 25,554.66 (close)

New York – S&P 500: UP 0.3 percent at 2,791.52 (close)

New York – Nasdaq: UP 0.4 percent at 7,591.03 (close)

London – FTSE 100: UP 0.3 percent at 7,151.15 points (close)

Frankfurt – DAX 30: DOWN 0.2 percent at 11,524.17 (close)

Paris – CAC 40: UP 0.1 percent at 5,270.25 (close)

EURO STOXX 50: FLAT at 3,303.95 (close)

Tokyo – Nikkei 225: UP 1.8 percent at 21,503.69 (close)

Hong Kong – Hang Seng: UP 1.5 percent at 28.920.87 (close)

Shanghai – Composite: UP 1.1 percent at 3,060.31 (close)

Oil – Brent Crude: UP 9 cents at $66.67 per barrel

Oil – West Texas Intermediate: UP 8 cents at $56.87