Pound dives as PM may have used all her lives
Given that the UK government could be on the brink of collapse the FTSE was relatively stable compared to the wild swings seen in the pound and to heavy losses experienced across Europe
Share this:
Given that the UK government could be on the brink of collapse the FTSE was relatively stable compared to the wild swings seen in the pound and to heavy losses experienced across Europe. Whilst a Brexit beaten pound and heavyweight miners offered support to the FTSE, stocks with large direct exposure to the UK were under growing pressure.
As the day’s progressed there are increasing concerns that not only the Brexit deal could be off but also that Theresa May could have run out of lives. Theresa May faced a bashing in the commons across the day where only a small number of Conservatives supported her deal, however the majority plus the opposition were highly critical. The exchanges in the commons make it difficult to see how Theresa May’s plan can make it through Parliament or even survive?
As Theresa May’s political life hangs in the balance the pound heads for its second largest daily drop this year, down 1.5% versus both the euro and the dollar. Growing uncertainty and fear of a disorderly Brexit was also reflected in the money markets, which have almost completely priced out a rate rise by the BoE next year. Now four resignations in, we are left wondering how many more will follow? The more resignations that Theresa May has to swallow, the harder it becomes for her to retain her authority.
Brexit sensitive stocks fall
On the FTSE, miners were dominating the upper reaches thanks to a recovery in the price of some base metals. On the downside heavily UK exposed stocks were the biggest decliners. Housebuilders have had a shocking session hit by a double whammy of a poor update from Bovis and fears that a disorderly Brexit will bring the already slow housing market to a complete standstill. Persimmon, Taylor Whimpey and Barratt Developments were down 10%, 9% and 8.1% respectively. The Royal Bank of Scotland was also hit hard as investors price in the chances of a general election. With the labour party pledging in its manifesto to break up the bank, investors aren’t willing to take the chance. Other banks such as Barclays and Lloyds were also heavily lower on the Brexit fallout.
The outlook has just grown increasingly more uncertain. There are several possible paths from here, including a very high probability of a disorderly Brexit and possibility even a general election. Given the markets dislike of uncertainty volatility mainly in sterling but also in the FTSE could step up going forward.
Related tags:
Latest market news
Open an account in minutes
Experience award-winning platforms with fast and secure execution, and enjoy tight spreads from 0.5 pts on FX and 0.3 pts on indices.
Economic calendar
Web Trader platform
Our sophisticated web-based platform is packed with features.
Related articles
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.forex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.