Sterling edges down after Brexit rally | 2019-03-15 | daily-sun.com

Sterling edges down after Brexit rally

15th March, 2019 12:04:45 printer

Sterling edges down after Brexit rally

HONG KONG: The pound retreated from nine-month highs in Asia on Thursday as investors are dogged by Brexit uncertainty, while equities were mixed as a healthy Wall Street lead was offset by more disappointing Chinese economic data.

In another night of drama in Westminster, MPs voted against leaving the European Union without a deal, having rejected Prime Minister Theresa May’s agreement with the bloc for a second time, reports AFP.

The move sent the pound soaring to highs not seen since June, with most observers warning that a no-deal divorce would hammer the British economy.

However, the currency retreated from those highs in Asia, with lawmakers due to vote on whether to extend the March 29 deadline for leaving.

May has warned that if MPs do not adopt her pact there could be a lengthy delay to Brexit that would see Britain taking part in European Parliament elections in May. “The Brexit soap opera continued with … parliament voting, as expected, against leaving the European Union without a deal,” said Jeffrey Halley, senior market analyst at OANDA. “Sterling inevitably rose overnight as traders piled into the hope-vs-reality trade.”

But he added: “Being irrationally exuberant on the pound could be a dangerous trade at these lofty levels in the short-term.

“No one has actually asked the Europeans what they want, and they may yet impose potentially unpalatable conditions as the price of an (exit) extension.”

On equity markets Shanghai sank 1.2 percent after figures showed factory output grew slower than forecast in the first two months of the year, while retail sales and investment were broadly in line with expectations.

The tepid readings highlighted weakness in the world’s number two economy and reinforced the need for measures by the Chinese government to kickstart growth as the global economy stutters and the US trade war drags on.

The “data means the economy will take a longer time to bottom out as industrial production and consumption are still under pressure despite the rebound in investment”, Liu Peiqian, Asia strategist at Natwest Markets PLC, told Bloomberg News.


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