The British pound sank yesterday to a near three-week low under $1.30, as traders fretted over Brexit on the eve of another critical parliamentary vote for Prime Minister Theresa May.
In overnight Asian trade, sterling tanked to $1.2949 ‒ the lowest since February 19. It has since bobbed back above the key $1.30 level. The pound also dropped against the euro.
Europe’s equity markets meanwhile rose in afternoon deals as investors snapped up bargains after last week’s heavy losses sparked by global economic fears.
London’s benchmark FTSE 100 was up 0.2 per cent on the weak pound, which boosts share prices of key multinationals whose foreign earnings can be expected to benefit from a weaker currency.
“The pound has started the new week a little on the back foot as the markets await what could be a pivotal few days on the Brexit front, with these developments remaining the primary driver of the currency for the foreseeable future,” said analyst David Cheetham at brokerage XTB.
The EU’s chief Brexit negotiator Michel Barnier told AFP yesterday that negotiations to break a deadlock on a deal are now between May and members of her Parliament.
“We held talks over the weekend and the negotiations now are between the government in London and the Parliament in London,” Mr Barnier said as he arrived at EU headquarters in Brussels to discuss Brexit with envoys from the other 27 member states.
“We are 24-hours away from Ms May’s supposed ‘meaningful’ Brexit vote and the rumour is that (she) could lose this vote by a wider margin than the last one,” said Oanda analyst Dean Popplewell.
“As expected, sterling remains volatile,” he warned.
“Though the Prime Minister is still valiantly trying to negotiate some last minute changes with the EU, she is neither making progress in Brussels nor at home,” noted City Index analyst Fiona Cincotta.
"The choice for MPs will be either a hard Brexit or postponing this date, and the latter option seems to be gathering more momentum.”
World equities had plunged Friday as fears over the global economy were fanned by weak US job creation figures, a European Central Bank growth forecast downgrade and data showing Chinese trade slumped last month.
The Labor Department said the US economy created just 20,000 jobs last month, a fraction of what was expected.
The newsflow knocked equity markets, which have enjoyed a stellar start to the year on hopes that China and the United States will resolve their trade war.
Meanwhile, shares in Boeing slumped nearly 13 per cent in opening trade after one of the company’s aircraft crashed in Ethiopia over the weekend, with China, Indonesia and Ethiopia grounding their Boeing 737 MAX jets as a result.