The pound retreated Thursday amid yet another Brexit vote, after the UK currency struck multi-month highs versus the dollar and euro thanks to British MPs ruling out a no-deal departure from the European Union.
London’s benchmark FTSE 100 index climbed, boosted by softness in the pound, which typically helps lift share prices of multinationals.
“The pound has pulled away from its multi-month highs against the dollar and euro reached yesterday after the UK parliament voted against leaving the EU without a deal,” said Dean Popplewell, analyst at Oanda trading group.
Parliament later voted to ask the EU to approve a Brexit delay at least through June, but blocked a bid for a second referendum, a blow to pro-EU campaigners.
Recent turns in the “Brexit merry-go-round,” as XTB chief market analyst David Cheetham called it, seemed to give rise to some cautious optimism about sterling’s future trajectory.
– ‘Highly sensitive’ –
“The pound will likely remain highly sensitive to headline risk in the foreseeable future, but with the range of outcomes now seemingly ranging from May’s deal to increasingly softer versions of Brexit, a lot of the worst downside risks are being priced out the currency, and this may pave the way for further gains,” Cheetham said.
Market focus was also on China, with Shanghai’s stock market closing down 1.2 percent after figures showed the country’s factory output grew slower than forecast in the first two months of the year.
Chinese 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 trade war with the US drags on.
Comments in Washington that the trade talks are going well were not enough to dispel the sense an agreement has been delayed. Wall Street spun its wheels awaiting definitive news: the benchmark Dow was essentially flat, while the broader S&P 500 dipped a fraction.
Peter Cardillo of Spartan Capital told AFP that markets were in a “wait-and-see mode.”
“The trade deal seems to be pushed back, it caused some hesitancy,” he said.
Eurozone stock markets were firmer at the close, with the CAC-40 index in Paris having set a new high for 2019.
Oil prices initially rose after OPEC, citing secondary sources, said the cartel’s production fell again in February. A production drop in crisis-ridden Venezuela accounted for more than half of the slowdown, it said in a monthly report.
But by the end of the European trading day, Brent had run into profit-taking while US benchmark WTI held onto its gains.
– Key figures around 2100 GMT –
Pound/dollar: DOWN to $1.3238 from $1.3339 at 2100 GMT
Euro/pound: UP to 85.36 pence from 85.00 pence
Euro/dollar: DOWN to $1.1304 from $1.1334
Dollar/yen: UP to 111.65 yen from 111.17 yen
New York – DOW: UNCH at 25,709.94 (close)
New York – S&P 500: DOWN 0.1 percent to 2,808.48 (close)
New York – Nasdaq: DOWN 0.2 percent to 7,630.91 (close)
London – FTSE 100: UP 0.4 percent at 7,185.43 points (close)
Frankfurt – DAX 30: UP 0.1 percent at 11,587.47 (close)
Paris – CAC 40: UP 0.8 percent at 5,349.78 (close)
EURO STOXX 50: UP 0.6 percent at 3,342.03 (close)
Tokyo – Nikkei 225: FLAT at 21,287.02 (close)
Hong Kong – Hang Seng: UP 0.2 percent at 28,851.39 (close)
Shanghai – Composite: DOWN 1.2 percent at 2,990.69 (close)
Oil – Brent Crude: DOWN 39 cents to $67.16 per barrel
Oil – West Texas Intermediate: UP 24 cents to $58.50 per barrel