Pound recovers with UK set for general election

AFP
London, United Kingdom Published: Oct 29, 2019, 08:55 PM(IST)

File photo. Photograph:( AFP )

Story highlights

Britain appeared headed for a December election after the main opposition Labour party said it would support Johnson's desire for a pre-Christmas poll

The pound recovered Tuesday against the dollar and euro as Prime Minister Boris Johnson looked set to secure his wish for a general election before Christmas aimed at finally forcing through Brexit.

Traders were looking ahead also to a meeting of the Federal Reserve that was expected to end with the US central bank announcing an interest-rate cut on Wednesday.

Around 1115 GMT, sterling clawed back losses to trade at $1.2862, virtually unchanged compared with its level late Monday in New York.

The euro meanwhile reversed direction to stand 0.2-per cent lower at 86.14 pence.

"Bulls have finally escaped the selling pressure and pushed sterling higher on the back of the news that Labour is finally backing the elections," commented Naeem Aslam, chief market analyst at ThinkMarkets. 

"The spike in sterling is decent but we are not expecting any significant moves."

Britain appeared headed for a December election after the main opposition Labour party said it would support Johnson's desire for a pre-Christmas poll.

Labour leader Jeremy Corbyn said the decision by European Union leaders on Monday to again delay Brexit meant that "for the next three months, our condition of taking 'no-deal' off the table has now been met".

David Cheetham, chief market analyst at XTB trading group, said "the pound will likely stay fairly well supported unless a no-deal outcome becomes more than marginally possible once more".

He added: "Elections are often seen as bringing heightened uncertainty and therefore negative in the near-term for affected markets, but in this case there is a hope that it will bring an end to the present quandary we find ourselves in." 

In equities trade, London's benchmark FTSE 100 index was down 0.7 per cent in late morning deals, extending earlier losses as the stronger pound weighed on share price for multinationals that have substantial earnings in dollars.

In the eurozone, Frankfurt's DAX 30 lost 0.2 per cent and the Paris CAC 40 shed 0.1 per cent. 

Elsewhere Tuesday, Asian stock markets diverged following another record-high close for Wall Street on Monday amid a renewed sense of hope over China-US trade talks.

Expectations for a US rate cut and some strong company earnings were also providing a much-needed lift to confidence after a rollercoaster year on global trading floors.

Oil prices extended Monday's big losses that had been sparked by reports of another pick-up in US stockpiles that indicated weak demand growth.

Key figures around 1115 GMT

Pound/dollar: DOWN slightly at $1.2862 from $1.2863 at 2100 GMT

Euro/pound: DOWN at 86.14 pence from 86.29 pence 

Euro/dollar: DOWN at $1.1081 from $1.1100

Dollar/yen: DOWN at 108.90 yen from 108.95 yen

London - FTSE 100: DOWN 0.7 per cent at 7,278.43 points

Frankfurt - DAX 30: DOWN 0.2 per cent at 12,921

Paris - CAC 40: DOWN 0.1 per cent at 5,726.50

EURO STOXX 50: DOWN 0.2 per cent at 3,618.32

Tokyo - Nikkei 225: UP 0.5 per cent at 22,974.13 (close)

Hong Kong - Hang Seng: DOWN 0.4 per cent at 26,786.76 (close)

Shanghai - Composite: DOWN 0.9 per cent at 2,954.18 (close)

New York - Dow: UP 0.5 per cent at 27.090.72 (close)

Brent North Sea crude: DOWN 1.1 per cent at $60.87 per barrel

West Texas Intermediate: DOWN 1.2 per cent at $55.14 per barrel

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