Pound struggles to recover after shock British vote

Sterling took a beating on Friday after Prime Minister Theresa May’s ruling Conservative Party lost its Westminster majority, days before it starts crunch talks with the EU on exiting the bloc

AFP, HONG KONG: The pound struggled yesterday to bounce back from last week’s sharp losses triggered by a shock British election result that has thrown the country into uncertainty.
Sterling took a beating on Friday after Prime Minister Theresa May’s ruling Conservative Party lost its Westminster majority, days before it starts crunch talks with the EU on exiting the bloc.
May called the election three years early in a bid to strengthen her hand in looming Brexit negotiations, but the gamble backfired spectacularly and now she must rely on the support of Northern Ireland’s Democratic Unionist Party.
“With May’s leadership teetering on the brink, the UK steps ever so closer to the calamitous Brexit cliff edge scenario,” Stephen Innes, senior trader at OANDA, said in a note.
“Certainly, prolonged uncertainty would argue for a deeper correction on sterling as May’s diminished Brexit mandate scenario plays out.”
The pound sank to a seven-week low of $1.2636 at one point Friday before recovering slightly. In Asian trade Monday it was at $1.2729.
‘Buzz kill’ 
On equity markets technology firms tumbled, in line with losses in New York, where the Nasdaq was dragged down by big losses in big-name firms including Apple, Microsoft and Google parent Alphabet.
In Tokyo, Sony lost 1.2 per cent and Sharp dived more than three percent, while in Seoul Samsung lost 1.6 percent. Hong Kong-listed Tencent was more than two per cent off.
On broader markets Tokyo ended 0.5 per cent down, while Hong Kong shed 1.2 per cent and Seoul gave up one percent. Taipei slipped 0.9 per cent and Shanghai closed 0.6 per cent down.
“There’s a chance US internet technology stocks that have propelled a global stock rally will now serve as a buzz kill,” Mitsuo Shimizu, deputy general manager at Japan Asia Securities in Tokyo, told Bloomberg News.
Analysts described the movements as a rotation, in which investors were taking profits from highly valued sectors and putting the funds in areas that have underperformed, such as financials, energy and retailers.
Dealers are now waiting for the Federal Reserve’s next policy meeting, which ends Wednesday. While the central bank is widely expected to raise interest rates, its post-meeting statement will be pored over for clues about policymakers’ plans for future increases and their view on the world’s top economy.
The euro edged up slightly as it became clear that the party of new French President Emmanuel Macron was heading for a huge majority after Sunday’s first round of voting for the National Assembly.
In early European trade London slipped 0.5 percent, Paris eased 0.4 per cent and Frankfurt was off 0.3 percent.

 

Pound struggles to recover after shock British vote

Sterling took a beating on Friday after Prime Minister Theresa Mays ruling Conservative Party lost its Westminster majority, days before it starts crunch talks with the EU on exiting the bloc

AFP, HONG KONG: The pound struggled yesterday to bounce back from last weeks sharp losses triggered by a shock British election result that has thrown the country into uncertainty. Sterling took a beating on Friday after Prime Minister Theresa Mays ruling Conservative Party lost its Westminster majority, days before it starts crunch talks with the EU on exiting the bloc. May called the election three years early in a bid to strengthen her hand in looming Brexit negotiations, but the gamble backfired spectacularly and now she must rely on the support of Northern Irelands Democratic Unionist Party. With Mays leadership teetering on the brink, the UK steps ever so closer to the calamitous Brexit cliff edge scenario, Stephen Innes, senior trader at OANDA, said in a note. Certainly, prolonged uncertainty would argue for a deeper correction on sterling as Mays diminished Brexit mandate scenario plays out. The pound sank to a seven-week low of $1.2636 at one point Friday before recovering slightly. In Asian trade Monday it was at $1.2729. Buzz kill On equity markets technology firms tumbled, in line with losses in New York, where the Nasdaq was dragged down by big losses in big-name firms including Apple, Microsoft and Google parent Alphabet. In Tokyo, Sony lost 1.2 per cent and Sharp dived more than three percent, while in Seoul Samsung lost 1.6 percent. Hong Kong-listed Tencent was more than two per cent off. On broader markets Tokyo ended 0.5 per cent down, while Hong Kong shed 1.2 per cent and Seoul gave up one percent. Taipei slipped 0.9 per cent and Shanghai closed 0.6 per cent down. Theres a chance US internet technology stocks that have propelled a global stock rally will now serve as a buzz kill, Mitsuo Shimizu, deputy general manager at Japan Asia Securities in Tokyo, told Bloomberg News. Analysts described the movements as a rotation, in which investors were taking profits from highly valued sectors and putting the funds in areas that have underperformed, such as financials, energy and retailers. Dealers are now waiting for the Federal Reserves next policy meeting, which ends Wednesday. While the central bank is widely expected to raise interest rates, its post-meeting statement will be pored over for clues about policymakers plans for future increases and their view on the worlds top economy. The euro edged up slightly as it became clear that the party of new French President Emmanuel Macron was heading for a huge majority after Sundays first round of voting for the National Assembly. In early European trade London slipped 0.5 percent, Paris eased 0.4 per cent and Frankfurt was off 0.3 percent.