Pound tumbles on Brexit agony as trade fight weighs on Wall Street
May 23, 2019 06:42 AM GMT+0530 | 0 Comment(s)
AFP - The pound hit a four-month low against the dollar Wednesday after Prime Minister Theresa May's latest Brexit maneuver drew widespread scorn, while Wall Street shares declined amid anxiety over US-China trade uncertainty.
The pound also was weaker against the euro a day after May offered a revised EU divorce deal that included a promise for lawmakers to set a confirmatory referendum on whatever version of Brexit they end up approving.
"Politicians from all sides trashed her proposals, leaving the pound mired at four-month lows while the prime minister awaits her end of days," said OANDA senior market analyst Jeffrey Halley.
"A settlement remains as distant as ever," he warned.
May has failed three times to pass her controversial withdrawal agreement in parliament, and has vowed to set out departure plans shortly after the next vote on her deal.
European stock markets gyrated, with London and Frankfurt eking out gains and Paris slipping lower.
Wall Street stocks, which have been volatile over the last two weeks in the wake of new tariff announcements by Beijing and Washington, pulled back again. The US and China have said they expect to resume talks but have not set a date.
- Tariffs raise prices -
Meanwhile, US Treasury Secretary Steven Mnuchin acknowledged that consumers may pay higher prices as a result of the steep tariffs imposed on Chinese goods, contradicting US President Donald Trump who claims China pays for the tariffs creating a windfall for the US government.
"There may in some cases be an impact passed on to our consumers," Mnuchin said in congressional testimony.
Minutes from the Federal Reserve's April 30-May 1 policy meeting said economic risks to the US had receded but were still present, and the central bank is content to be patient before moving interest rates in either direction.
However, the meeting was held at a time when optimism was high for a deal to end the US-China trade war and before Trump more than doubled tariffs on $200 billion in Chinese goods, sparking further retaliation from Beijing.
Many analysts expect more volatility in the period ahead due to the unsettled nature of the US-China conflict.
"The prevalence, and volatile nature, of trade headlines that have no clear end-date helped curb some of yesterday's trade-related enthusiasm," Briefing.com said.
Oil prices fell after data pointed to a surprise increase in US inventories, while Washington appeared to tone down its rhetoric from recent weeks with Iran, saying it did not want a war with the Islamic republic.
- Key figures around 2040 GMT -
New York - Dow: DOWN 0.4 percent at 25,776.61 (close)
New York - S&P 500: DOWN 0.3 percent at 2,856.27 (close)
New York - Nasdaq: DOWN 0.5 percent at 7,750.84 (close)
London - FTSE 100: UP 0.1 percent at 7,378.98 (close)
Frankfurt - DAX 30: UP 0.2 percent at 12,168.74 (close)
Paris - CAC 40: DOWN 0.1 percent at 5,378.98 (close)
EURO STOXX 50: FLAT at 3,386.72 (close)
Tokyo - Nikkei 225: UP 0.1 percent at 21,283.37 (close)
Hong Kong - Hang Seng: UP 0.2 percent at 27,705.94 (close)
Shanghai - Composite: DOWN 0.5 percent at 2,891.70 (close)
Pound/dollar: DOWN at $1.2661 from $1.2706 at 2100 GMT
Euro/pound: UP at 88.09 pence from 87.84 pence
Euro/dollar: DOWN at $1.1155 from $1.1161
Dollar/yen: DOWN at 110.30 yen from 110.50 yen
Oil - Brent Crude: DOWN $1.19 at $70.99 per barrel
Oil - West Texas Intermediate: DOWN $1.71 at $61.42 per barrel