Pound tanks on Brexit fear as Asia markets retreat

AFP, HONG KONG: The pound struggled at 32-year lows against the dollar in Asia yesterday after reports said British Prime Minister Theresa May was ready to take the country out of the European Union in a so-called “hard Brexit”.
Sterling’s retreat came with losses on most Asian stock markets as investors nervously await Donald Trump’s inauguration speech on Friday, having been left disappointed at his lack of detail on economic policy at a news conference last week.
A number of Sunday newspapers in the UK said May was willing to pull out of the single market, the European customs union and the European Court of Justice, in order to regain control of immigration.
The news sent sterling plunging to $1.1986, its lowest since October’s “flash crash” that sent it to $1.1841 -- a level not seen since the start of 1985.
The unit later pared some of the losses to sit just above $1.20. “The weekend reports were undoubtedly the factor that pushed the pound down,” said Nomura forex strategist Yoshitaka Suda. “Markets are watching what Britain does.”
The reports come as May prepares to give a speech Tuesday on the government’s strategy on leaving the EU. The PM aims to launch two years of departure talks when she triggers the Article 50 exit process by the end of March, although a legal challenge is still pending before the country’s Supreme Court.
Eyes on Trump speech
“Even if the pound recovers somewhat in London, it seems as though the realities of a hard Brexit are still not fully priced in,” Sean Callow, senior strategist at Westpac Banking Corp. in Sydney, told Bloomberg News.
“It is difficult to make the case for the pound to avoid testing, probably breaking, the ‘flash crash’ lows in coming weeks.”
Regional stock markets were also under pressure as dealers look ahead to Trump’s inauguration Friday with uncertainty.
World equities surged after his election win in November on bets his plans for big infrastructure spending and tax cuts would fire the world’s top economy, and in turn the global economy.
But the lack of any definitive plan at last week’s briefing left many scratching their heads and worrying he might not fulfill his promises.
Tokyo ended one per cent  lower as a pick-up in the yen against the dollar hit exporters, while Hong Kong also shed one per cent . Shanghai ended down 0.3 per cent . Seoul lost 0.6 per cent , Singapore retreated 0.7 per cent  and Taipei slipped 0.9 per cent , although Sydney edged up 0.5 per cent .

 

 

Pound tanks on Brexit fear as Asia markets retreat

AFP, HONG KONG: The pound struggled at32-year lows against the dollar in Asia yesterday after reports said British Prime Minister Theresa May was ready to take the country out of the European Union in a so-called hard Brexit. Sterlings retreat came with losses on most Asian stock markets as investors nervouslyawait Donald Trumps inauguration speech on Friday, having been left disappointed at his lack of detail on economic policy at a news conference last week. A number of Sunday newspapers in the UK said May was willing to pull out of the single market, the European customs union and the European Court of Justice, in order to regain control of immigration. The news sent sterling plunging to $1.1986, its lowest since Octobers flash crash that sent it to $1.1841 -- a level not seen since the start of 1985. The unit later pared some of the losses to sit just above $1.20. The weekend reports were undoubtedly the factor that pushed the pound down, said Nomura forex strategist Yoshitaka Suda. Markets are watching what Britain does. The reports come as May prepares to give a speech Tuesday on the governments strategy on leaving the EU. The PM aims to launch two years of departure talks when she triggers the Article 50 exit process by the end of March, although a legal challenge is still pending before the countrys Supreme Court. Eyes on Trump speech Even if the pound recovers somewhat in London, it seems as though the realities of a hard Brexit are still not fully priced in, Sean Callow, senior strategist at Westpac Banking Corp. in Sydney, told Bloomberg News. It is difficult to make the case for the pound to avoid testing, probably breaking, the flash crash lows in coming weeks. Regional stock markets were also under pressure as dealers look ahead to Trumps inauguration Friday with uncertainty. World equities surged after his election win in November on bets his plans for big infrastructure spending and tax cuts would fire the worlds top economy, and in turn the global economy. But the lack of any definitive plan at last weeks briefing left many scratching their heads and worrying he might not fulfill his promises. Tokyo ended one per cent lower as a pick-up in the yen against the dollar hit exporters, while Hong Kong also shed one per cent . Shanghai ended down 0.3 per cent . Seoul lost 0.6 per cent , Singapore retreated 0.7 per cent and Taipei slipped 0.9 per cent , although Sydney edged up 0.5 per cent .