Pound rebounds on Brexit speech

18/01/2017 07:29 AST

The British pound rebounded above $1.23 on Tuesday after Prime Minister Theresa May declared that any Brexit deal would be voted by Parliament. The London stock market fell further as the stronger pound weighed on share prices of multi-national firms.

Frankfurt and Paris both flirted with positive territory before slipping back into the red. “The prime minister has adopted a more pragmatic approach to Brexit than expected, providing some much needed relief for the pound,” NFS Macro analyst Nick Stamenkovic told AFP. “Indeed, the surprise decision to allow Parliament to decide on the final Brexit deal signals a more flexible approach.”

Britain’s Parliament will be able to vote on any final Brexit agreement, Theresa May said Tuesday following pressure from lawmakers to have more say over leaving the EU. The news sent the pound rallying to $1.2340 — the highest level for 10 days. That compared with $1.21 just before the speech and $1.2055 late in New York on Monday. “The pound took off like a rocket today on what amounts to a far less hawkish Brexit speech from Theresa May than many had feared,” said ETX Capital analyst Neil Wilson. Sterling had slumped Monday on reports that May was ready to take the country out of the EU in a so-called “hard” Brexit. “The bulk of what May said today had already been leaked so we actually learned very little from the speech,” noted Oanda analyst Craig Erlam. “The one point of interest was the revelation that Parliament will vote on the deal which sent the pound higher and in turn, the FTSE lower given the inverse correlation between the two that has been so clear since the Brexit referendum. “The pound has continued to rise since the speech.”

The pound had collapsed on Monday to $1.1986, its lowest level since October’s “flash crash” that had sent it to a 31-year low of $1.1841. Dollar weakens

A recent sell-off in the dollar deepened as US traders returned from a long weekend to widespread weakness after President-elect Donald Trump said the greenback’s strength against the Chinese yuan “is killing us.” The world’s top currency sank past $1.07 per euro for the first time since Dec. 8 and below 113 yen before the resurgent British pound raced up 2.5 percent to as high as $1.2347.

Gold prices soar

Gold jumped more than 1 percent to its highest in nearly eight weeks on Tuesday after Trump’s comments on dollars. Spot gold rose 0.7 percent to $1,217.11 per ounce by 1335 GMT, after touching a Nov. 22 high of $1,218.64 ounces. US gold futures were up 1.3 percent at $1,210.70 per ounce. The dollar, in which gold is priced, fell half a percent to six-week lows against major currencies.

Arab News